(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics.
The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet.
-The total Pediatrics Department cost after the allocations of service department costs is closest to:
A) $302,436
B) $304,070
C) $304,136
D) $295,810

Question

(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics.
  The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet.
-The total Pediatrics Department cost after the allocations of service department costs is closest to:
A) $302,436 
B) $304,070 
C) $304,136 
D) $295,810

Quizplus · Accepted Answer

Allocation base for Administrative costs = 26,000 + 14,000 = 40,000
Allocation base for Support costs = 38,000 + 6,000 = 44,000
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(Appendix 4B) Maute Clinic Has Two Service Departments, Administrative and Support