Stazenski Children's Clinic allocates service department costs to operating departments using the step-down method.The clinic has two service departments,Administration and Information Technology (IT),and two operating departments,Prenatal and Pediatric.Data concerning those departments follow: Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.The total Pediatric Department cost after allocations is closest to:
A)$435,029
B)$390,920
C)$434,832
D)$423,486

Question

Stazenski Children's Clinic allocates service department costs to operating departments using the step-down method.The clinic has two service departments,Administration and Information Technology (IT),and two operating departments,Prenatal and Pediatric.Data concerning those departments follow:   Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.The total Pediatric Department cost after allocations is closest to:
A)$435,029 
B)$390,920 
C)$434,832 
D)$423,486

Quizplus · Accepted Answer

Allocation base for Administration costs = 26 + 115 + 169 = 310
Allocation base for IT costs = 100 + 166 = 266
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Stazenski Children's Clinic Allocates Service Department Costs to Operating Departments