Eldercare One,Two and Three are managed as a profit centers by the parent company.Revenues were $1,200,000,$500,000 and $300,000 respectively and patients numbered 270,80 and 50 respectively.Insurance costs of $400,000 are allocated to each center based on number of patients.Eldercare Two would be allocated cost of:

Question

Quizplus · Accepted Answer

Insurance costs are allocated based on the number of patients, so Eldercare Two with 80 patients would be allocated 80/400 (or 1/5) of the total insurance cost of $400,000. This would be equal to $80,000.

Eldercare One,Two and Three Are Managed as a Profit Centers