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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 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 $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 1 year ago
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