Zoopsia Hospital has two service departments and three operating departments. Selected information on the five departments for last year is as follows: Zoopsia allocates Power Generation cost first on the basis of kilowatt hours. Zoopsia then allocates Laundry cost on the basis of the number of employees. Operating costs in Power Generation for last year were $250,000. Operating costs in Laundry for last year were $60,000. No distinction is made between variable and fixed costs.
-If service department costs are allocated using the step-down method, what is the total amount of service cost that will be allocated to Maternity?
A) $66,425
B) $73,000
C) $84,500
D) $88,000

Question

Zoopsia Hospital has two service departments and three operating departments. Selected information on the five departments for last year is as follows:  Zoopsia allocates Power Generation cost first on the basis of kilowatt hours. Zoopsia then allocates Laundry cost on the basis of the number of employees. Operating costs in Power Generation for last year were $250,000. Operating costs in Laundry for last year were $60,000. No distinction is made between variable and fixed costs.
-If service department costs are allocated using the step-down method, what is the total amount of service cost that will be allocated to Maternity?
A) $66,425 
B) $73,000 
C) $84,500 
D) $88,000

Quizplus · Accepted Answer

The Answer of Zoopsia Hospital has two service departments and three operating departments. Selected information on the five departments for last year is as follows:  Zoopsia allocates Power Generation cost first on the basis of kilowatt hours. Zoopsia then allocates Laundry cost on the basis of the number of employees. Operating costs in Power Generation for last year were $250,000. Operating costs in Laundry for last year were $60,000. No distinction is made between variable and fixed costs.
-If service department costs are allocated using the step-down method, what is the total amount of service cost that will be allocated to Maternity?
A) $66,425 
B) $73,000 
C) $84,500 
D) $88,000

Zoopsia Hospital Has Two Service Departments and Three Operating Departments