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The Buckaneer Clinic has two service departments (Human Resources and Information Resources) and two "production" departments...

The Buckaneer Clinic has two service departments (Human Resources and Information Resources) and two "production" departments (In-patient Treatment and Out-patient Treatment). The service departments service the "production" departments as well as each other, and studies have shown that Information Resources provides the greater amount of service. Which of the following allocations would occur if Buckaneer uses the direct method of cost allocation?

Multiple Choice

  • Information Resources cost would be allocated to In-patient Treatment.

  • Information Resources cost would be allocated to Human Resources.

  • Human Resources cost would be allocated to Information Resources.

  • In-patient Treatment cost would be allocated to Out-patient Treatment.

  • Out-patient Treatment cost would be allocated to Information Resources.

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Expert Solution

The Buckaneer Clinic has two service departments (Human Resources and Information Resources) and two "production" departments (In-patient Treatment and Out-patient Treatment). The service departments service the "production" departments as well as each other, and studies have shown that Information Resources provides the greater amount of service. Which of the following allocations would occur if Buckaneer uses the direct method of cost allocation?
Multiple Choice
Information Resources cost would be allocated to In-patient Treatment. Correct
Information Resources cost would be allocated to Human Resources. This would not occur using the direct method
Human Resources cost would be allocated to Information Resources. This would not occur using the direct method
In-patient Treatment cost would be allocated to Out-patient Treatment. This would not occur using the direct method
Out-patient Treatment cost would be allocated to Information Resources. This would not occur using the direct method

ekkarill92 answered 9 months ago
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