(Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery.
Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees.
-The total Surgery Department cost after service department allocations is closest to:
A) $598,249
B) $608,636
C) $602,727
D) $605,827

Question

(Appendix 4B) Romain Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery.
  Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees.
-The total Surgery Department cost after service department allocations is closest to:
A) $598,249 
B) $608,636 
C) $602,727 
D) $605,827

Quizplus · Accepted Answer

Allocation base for Information Technology costs = 54 + 30 = 84
Allocation base for Administration costs = 95 + 27 = 122
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(Appendix 4B) Romain Surgical Hospital Uses the Direct Method to Allocate