Question
In: Accounting
Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for...
Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for all departments in the hospital for the forthcoming quarter are presented in the table below:
|
Service Departments |
Operating Departments |
|||||||||
| Housekeeping Services | Food Services | Administrative Services | Laboratory | Radiology | General Hospital | Total | ||||
| Total cost | $107,000 | $341,060 | $289,020 | $455,900 | $600,500 | $545,800 | $2,339,280 | |||
| Meals served | 2,800 | 6,000 | 3,000 | 80,000 | 91,800 | |||||
| Square feet of space | 7,000 | 19,000 | 10,500 | 16,000 | 9,500 | 128,000 | 190,000 | |||
| Files processed | 24,000 | 17,000 | 45,000 | 86,000 | ||||||
The costs of the service departments are allocated by the step-down method using the allocation bases and in the order shown in the following table:
| Service Department | Allocation Bases | |
| Housekeeping Services | Square feet of space | |
| Food Services | Meals served | |
| Administrative Services | Files processed | |
All billing in the hospital is done through Laboratory, Radiology, or General Hospital. The hospital’s administrator wants the costs of the three service departments allocated to these three billing centers.
Required:
Using the step-down method, prepare the cost allocation desired by the hospital administrator. Include under each billing center the direct costs of the center, as well as the costs allocated from the service departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Solutions
Expert Solution
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| Woodbury Hospital |
| Note: Under step down method the support department with highest cost is allocated first among other service and operating dept. Then service dept. with next highest cost is allocated and so on. Here Food Services dept. has highest cost so it is allocated first and then admin dept. and at last Housekeeping dept. |
| Step Down Method | Housekeeping | Food | Admin | Laboratory | Radiology | General Hospital | Total |
| Square feet of space | 7,000.00 | 19,000.00 | 10,500.00 | 16,000.00 | 9,500.00 | 128,000.00 | 190,000.00 |
| Meals served | 2,800.00 | 6,000.00 | 3,000.00 | 80,000.00 | 91,800.00 | ||
| Files processed | 24,000.00 | 17,000.00 | 45,000.00 | 86,000.00 | |||
| Costs before allocation | 107,000.00 | 341,060.00 | 289,020.00 | 455,900.00 | 600,500.00 | 545,800.00 | 2,339,280.00 |
| Allocation of Food dept. in the ratio of meals served | (289,020.00) | ||||||
| Allocation % | 3.05% | 6.54% | 3.27% | 87.15% | 100.00% | ||
| Allocation amount | - | (341,060.00) | 10,402.70 | 22,291.50 | 11,145.75 | 297,220.04 | - |
| Costs after allocation | 107,000.00 | - | 299,422.70 | 478,191.50 | 611,645.75 | 843,020.04 | 2,339,280.00 |
| Allocation of admin dept. in the ratio of files | |||||||
| Allocation % | - | 27.91% | 19.77% | 52.33% | 100.00% | ||
| Allocation amount | - | - | (299,422.70) | 83,559.82 | 59,188.21 | 156,674.67 | - |
| Costs after allocation | 107,000.00 | - | - | 561,751.33 | 670,833.96 | 999,694.71 | 2,339,280.00 |
| Allocation of admin dept. in the ratio of space | |||||||
| Allocation % | 10.42% | 6.19% | 83.39% | 100.00% | |||
| Allocation amount | (107,000.00) | 11,153.09 | 6,622.15 | 89,224.76 | - | ||
| Costs after allocation | - | - | - | 572,904.00 | 677,456.00 | 1,088,920.00 | 2,339,280.00 |
ekkarill92 answered 2 years agoRelated Solutions
Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for...
Woodbury Hospital has three service departments and three
operating departments. Estimated cost and operating data for all
departments in the hospital for the forthcoming quarter are
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Service Departments
Operating Departments
Housekeeping Services
Food Services
Administrative Services
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Radiology
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$420,900
$544,500
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14,800
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Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for...
Woodbury Hospital has three service departments and three
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