Coronation General 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

The reciprocal-services method allocates costs incurred by all departments to all departments based on the services provided and received between them. Therefore, all of the other allocations listed would take place under this method. However, it is not possible to allocate Surgery cost to Accounting and also allocate Internal Medicine cost to Surgery, as this would result in double-counting of the Surgery department's costs.

Coronation General Hospital Has Two Service Departments (Patient Records and Accounting)