QUESTION 1:

Rooney Health Care Center, Inc. has three clinics servicing the Seattle metropolitan area. The companys legal services department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $461,500. The annual cost of operating the computer services department is $584,800. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows.

	Number of		Number of
	Patients		Workstations
Sewell clinic	6,700		21
Alphretta clinic	4,300		20
Gwinnett clinic	6,400		23
Legal services			4
Computer services			6

Required

1. Allocate the cost of computer services to all of the clinics and the legal services department.

2. After allocating the cost of computer services, allocate the cost of legal services to the three clinics.

3. Compute the total allocated cost of service centers for each clinic.

QUESTION 2;

Zachary Corporation expects to incur indirect overhead costs of $128,150 per month and direct manufacturing costs of $21 per unit. The expected production activity for the first four months of the year are as follows.

	January		February		March		April
Estimated production in units	4,900		7,300		3,500		7,600

Required

1. Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.

2. Allocate overhead costs to each month using the overhead rate computed in Requirement a.

3. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.