Westside Hospital has two service departments (Patient Records and Accounting)and two "production" departments (Internal Medicine and Surgery).Which of the following allocations would not take place under the reciprocal-services method of cost allocation?

Question

Quizplus · Accepted Answer

In the reciprocal-services method, all service departments allocate costs to all other departments, including other service departments. Therefore, all the other allocations listed in the options would take place. However, allocating Surgery cost to Accounting and Internal Medicine cost to Surgery would create a cycle of allocations that cannot be resolved, known as "circularity." Hence, option E is the correct answer.

Westside Hospital Has Two Service Departments (Patient Records and Accounting)and