The Covington Clinic Has Two Service Departments (Human Resources and Information

Multiple Choice

The Covington Clinic has two service departments (Human Resources and Information Systems) and two "production" departments (In-patient Treatment and Out-patient Treatment) . The service departments service the "production" departments as well as each other, and studies have shown that Information Systems provides the greater amount of service. Which of the following allocations would not occur if Covington uses the step-down method of cost allocation?

A) Information Systems cost would be allocated to Human Resources.
B) Human Resources cost would be allocated to Information Systems.
C) Human Resources cost would be allocated to In-patient Treatment.
D) In-patient Treatment cost would be allocated to Out-patient Treatment.
E) Both Human Resources cost would be allocated to Information Systems and In-patient Treatment cost would be allocated to Out-patient Treatment.