Exam 20: Service Department Allocations

Rich Company has a Custodial Services department which services the company's Maintenance department and two operating departments,Machinery and Milling.Costs of Custodial Services are allocated to the other departments on the basis of square footage of space occupied.The amount of space occupied by each department is given below: Budgeted costs in Custodial Services amount to $86,400.The amount of Custodial Services cost allocated to Maintenance under the step-down method would be:

The direct method is used by Colquitt Publishing,Inc. ,to allocate service department costs to operating departments.The company has two service departments,Information Technology and Personnel,and two operating departments,Prepress and Printing. Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.The total Prepress Department cost after service department allocations is closest to:

President Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics. The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. -The total amount of Administrative Department cost allocated to the Adult Medicine Department is closest to:

The step-down method of allocation is more accurate than the direct method.

The direct method is used by Savela Clinic to allocate its service department costs to its operating departments.Data concerning those departments follow: Information Technology costs are allocated on the basis of computers and Personnel costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method.

Ponce Corporation, a manufacturer, uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing. Data concerning those departments follow: Administration Department costs are allocated first on the basis of labor hours and Facilities Department costs are allocated second on the basis of space occupied. -In the first step of the allocation,the amount of Administration Department cost allocated to the Assembly Department is closest to:

Chrisler Natal Clinic uses the step-down method to allocate service department costs to operating departments.The clinic has two service departments,Administration and Information Technology (IT),and two operating departments,Prenatal Care and Postnatal Care. Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers. Required: Allocate the service department costs to the operating departments using the step-down method.

The Uinta Company has two service departments and two operating departments. The following data are available from last year: The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs. -Assume that Uinta allocates service department costs by the step-down method,starting with Department 1.The total overhead costs allocated from Department 1 to Department X are:

The step-down method of allocating service department costs:

The Uinta Company has two service departments and two operating departments. The following data are available from last year: The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs. -Assuming that Uinta allocates service department costs by the direct method,the total overhead costs allocated from Department 2 to Department Y are:

Essex Consultancy uses the direct method to allocate its service department costs to its operating departments.The company has two service departments,Information Technology and Administration,and two operating departments,Corporate Practice and Government Practice.Data concerning those departments follow: Information Technology Department costs are allocated on the basis of computers and Administration Department costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method.

Diprima Clinic uses the step-down method to allocate service department costs to operating departments.The clinic has two service departments,Personnel and Information Technology (IT),and two operating departments,Family Medicine and Pediatric.Data concerning those departments follow: Personnel 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:

Goodland Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. -The total Operating Department Y cost after allocations is closest to:

Duda Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. -In the first step of the allocation,the amount of Personnel Department cost allocated to the Family Medicine Department is closest to:

Goodland Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. -In the first step of the allocation,the amount of Service Department A cost allocated to the Operating Department X is closest to:

Duda Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. -The total Geriatric Medicine Department cost after allocations is closest to:

Enzor Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery. Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees. -The total amount of Information Technology Department cost allocated to the two operating departments is closest to:

Voltaire Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Administrative and Facilities,and two operating departments,Assembly and Finishing. Administrative Department costs are allocated on the basis of employee hours and Facilities Department costs are allocated on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the direct method.

Grahe Emergency Care Hospital uses the step-down method to allocate service department costs to operating departments.The hospital has two service departments,Administration and Information Technology (IT),and two operating departments,Emergency Room and Intensive Care. Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers. Required: Allocate the service department costs to the operating departments using the step-down method.

Amorim Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Data Processing and Personnel,and two operating departments,Assembly and Finishing. Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.The total amount of Data Processing Department cost allocated to the two operating departments is closest to: