Kolinski Surgical Hospital uses the direct method to allocate service department costs to operating departments.The hospital has two service departments,Telecommunications and Administration,and two operating departments,Surgery and Recovery. Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees.The total Surgery Department cost after service department allocations is closest to:
A) $317,118
B) $314,853
C) $310,244
D) $305,921

Question

Kolinski Surgical Hospital uses the direct method to allocate service department costs to operating departments.The hospital has two service departments,Telecommunications and Administration,and two operating departments,Surgery and Recovery.  Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees.The total Surgery Department cost after service department allocations is closest to:
A) $317,118 
B) $314,853 
C) $310,244 
D) $305,921

Quizplus · Accepted Answer

Allocation base for Telecommunication costs = 40 + 34 = 74
Allocation base for Administration costs = 74 + 27 = 101
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Kolinski Surgical Hospital Uses the Direct Method to Allocate Service