Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for...

	Service Departments			Operating Departments
	Housekeeping Services	Food Services	Administrative Services	Laboratory	Radiology	General Hospital	Total
Total cost	$105,000	$337,060	$285,020	$450,900	$592,500	$538,800	$2,309,280
Meals served			2,600	5,600	2,800	78,800	89,800
Square feet of space	6,800	18,400	10,100	15,400	9,300	126,000	186,000
Files processed				23,000	16,000	43,000	82,000

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

		Service department			Operating Department
	Basis of Allocation	Housekeeping Services	Food Services	Administrative Services	Laboratory	Radiology	General Hospital	Total
Departmental cost before allocation		105000.00	337060.00	285020.00	450900.00	592500.00	538800.00	2309280.00
House Keeping		-105000.00	10781.25	5917.97	9023.44	5449.22	73828.13
Food Services			-347841.25	10071.13	21691.66	10845.83	305232.63
Administrative Services				-301009.10	84429.38	58733.48	157846.24

Allocation of House Keeping services		$
a) Housekeeping Services	105000*6800/186000	3838.71
Food Services	105000*18400/186000	10387.10	394.15	10781.25
Administrative Services	105000*10100/186000	5701.61	216.36	5917.97
Laboratory	105000*15400/186000	8693.55	329.89	9023.44
Radiology	105000*9300/186000	5250.00	199.22	5449.22
General Hospital	105000*126000/186000	71129.03	2699.09	73828.13

b) RE allocation of $3838.71 of house keeping services
Food Services	3838.71*18400/179200	394.15
Administrative Services	3838.71*10100/179200	216.36
Laboratory	3838.71*15400/179200	329.89
Radiology	3838.71*9300/179200	199.22
General Hospital	3838.71*126000/179200	2699.09
		3,838.71

Allocation of Food Services Costs

Total Cost	337060
Add Alocated cost of House Keeping	10781.25
Total cost to be allocated	347841.25

Administrative Services	347841.25*2600/89800	10071.13
Laboratory	347841.25*5600/89800	21691.66
Radiology	347841.25*2800/89800	10845.83
General Hospital	347841.25*78800/89800	305232.63
		347841.25

Allocation of Administrative Services Cost

Total Cost	285020.00
Add; Allocated cost of House Keeping	5917.97
Add; Allocated cost of Food Services	10071.13
	301009.10

Laboratory	301009.10*23000/82000	84429.38
Radiology	301009.10*16000/82000	58733.48
General Hospital	301009.10*43000/82000	157846.24
		301009.10

ekkarill92 answered 8 months ago

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