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 | $93,000 | $313,060 | $261,020 | $420,900 | $544,500 | $496,800 | $2,129,280 | |||
| Meals served | 1,400 | 3,200 | 1,600 | 71,600 | 77,800 | |||||
| Square feet of space | 5,600 | 14,800 | 7,700 | 11,800 | 8,100 | 114,000 | 162,000 | |||
| Files processed | 17,000 | 10,000 | 31,000 | 58,000 | ||||||
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
| Housekeeping services | Food services | Administartive services | Laboratory | Radiology | General hospital | |
| Departmental costs before allocations | $93,000 | $313,060 | $261,020 | $420,900 | $544,500 | $496,800 |
| Allocations | ||||||
| Housekeeping services costs | ($93,000) | $8,800 | $4,579 | $7,017 | $4,816 | $67,788 |
| Food service costs | ($321,860) | $5,792 | $13,238 | $6,620 | $296,210 | |
| Administrative service cost | ($271,391) | $79,545 | $46,792 | $145,054 | ||
| Total | $0 | $0 | $0 | $520,700 | $602,728 | $1,005,852 |
Explanation:
Housekeeping:
Food services =$93,000×14,800/156,400 =$8,800
Administrative=$93,000×7,700/156,400 =$4,579
Laboratory=$93,000×11,800/156,400 =$7,017
Radiology=$93,000×8,100/156,400 =$4,816
General hospital=$93,000×114,000/156,400 =$67,788
Food services:
Administrative =$321,860×1,400/77,800 =$5,792
Laboratory =$321,860×3,200/77,800 =$13,238
Radiology=$321,860×1,600/77,800 =$6,620
General hospital=$321,860 ×71,600/77,800 =$296,210
Administrative :
Laboratory=$271,391×17,000/58,000 =$79,545
Radiology=$271,391 ×10,000/58,000 =$46,792
General hospital =$271,391 ×31,000/58,000 =$145,054
ekkarill92 answered 1 year agoRelated Solutions
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