The attached raw data concerning service departments and biling departments for
ID: 2339933 • Letter: T
Question
The attached raw data concerning service departments and biling departments for Halifax Hospital is provided below. The hospital allocates cafeteria costs based on meals consumed, administrative costs based on patient files maintained, and laundry costs based upon loads washed REQUIRED: (1) Allocate the service department costs for the hospital using the directmethod Round all allocation rates to five decimal places and all dollar amounts to the nearest whole dollar Allocate the service department costs for the hospital using the step method. Be sure to allocate the departments in the appropriate order based upon services provided to other service departments. Round all allocation rates to five decimal places and all dollar amounts to the nearest whole dollar Allocate the service department costs for the hospital using the reciprocal method. Round all allocation rates to five decimal places and all dollar amounts to the nearest whole dollar (2) (3)Explanation / Answer
Answer 1 direct method
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Variable cost of department
80000
5200
5000
15000
10000
25000
Fixed costs
60000
17000
22000
41766
95000
340000
Total cost of department
140000
22200
27000
56766
105000
365000
Activity of department
Outpatient
OB
General
Total activity
Service department
Cost of department
Cost per activity (cost of department / total activity)
Meal consumed
0
8000
30000
38000
Cafeteria
140000
3.68421
Patient file kept
4000
1500
12500
18000
Administration
22200
1.23333
Laundry loads washed
1500
500
8000
10000
Laundry
27000
2.70000
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total
Total cost of department
140000
22200
27000
56766
105000
365000
715966
Meal consumed (activity of particulars billing department*3.68421)
-140000
0
29474
110526
0
Patient file kept (activity of particulars billing department*1.23333)
-22200
4933
1850
15417
0
Laundry loads washed (activity of particulars billing department*2.70)
-27000
4050
1350
21600
0
Total cost of department after allocation
0
0
0
65749
137674
512543
715966
Answer 2 step method
Under step method, allocation made step wise including service department. Once any service department allocated then other service department cost not allocated to allocated service department
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total activity
4933.32
Cost of department (check detail from below table)
Cost per activity (cost of department / total activity)
Meal consumed
800
450
0
8000
30000
39250
4050
140000
3.56688
Patient file kept
1280
4000
1500
12500
19280
1350
25054
1.29946
Laundry loads washed
1500
500
8000
10000
21600
30268
3.02684
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total
Total cost of department
140000
22200
27000
56766
105000
365000
715966
Meal consumed (activity of particulars billing department*3.56688)
-140000
2854
1605
0
28535
107006
0
Total
0
25054
28605
56766
133535
472006
715966
Patient file kept (activity of particulars billing department*1.29946)
-25054
1663
5198
1949
16243
0
Total
0
0
30268
61964
135484
488250
715966
Laundry loads washed (activity of particulars billing department*3.02684)
-30268
4540
1513
24215
0
Total cost of department after allocation
0
0
0
66504
136998
512464
715966
Answer 3 reciprocal method
Activity for self-department not considered in reciprocal allocation
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total
Meal consumed
800
450
0
8000
30000
39250
Patient file kept
420
1280
4000
1500
12500
19700
Laundry loads washed
40
10
1500
500
8000
10050
We can calculate % of activity. (activity of department/ total activity of department)
0
Meal consumed
2.04%
1.15%
0.00%
20.38%
76.43%
1
Patient file kept
2.13%
6.50%
20.30%
7.61%
63.45%
1
Laundry loads washed
0.40%
0.10%
14.93%
4.98%
79.60%
1
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total
Total cost of department
140000
22200
27000
56766
105000
365000
715966
Cost of Cafeteria allocate based on 2.04%,1.15%,0%,20.38%,76.43% respectively
-140000
2854
1605
0
28535
107006
0
Total
0
25054
28605
56766
133535
472006
715966
Cost of administration allocate based on 2.13%,6.5%,20.30%,7.61%,63.45% respectively
534
-25054
1628
5087
1908
15897
0
Total
534
0
30233
61853
135443
487903
715966
Cost of laundry allocate based on 0.40%,0.10%,14.93%,4.98%,79.60% respectively
120
30
-30233
4512
1504
24066
0
Total
654
30
0
66365
136947
511969
715966
Cost of Cafeteria allocate based on 2.04%,1.15%,0%,20.38%,76.43% respectively
-654
13
8
0
133
500
0
Total
0
43
8
66365
137080
512470
715966
Cost of administration allocate based on 2.13%,6.5%,20.30%,7.61%,63.45% respectively
1
-43
3
9
3
28
0
Total
1
0
10
66374
137083
512497
715966
Cost of laundry allocate based on 0.40%,0.10%,14.93%,4.98%,79.60% respectively
0
0
-10
2
1
8
0
Total
1
0
0
66376
137084
512505
715966
Cost of Cafeteria allocate based on 2.04%,1.15%,0%,20.38%,76.43% respectively
-1
0
0
0
0
1
0
Total cost of department after allocation
0
0
0
66376
137084
512506
715966
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Variable cost of department
80000
5200
5000
15000
10000
25000
Fixed costs
60000
17000
22000
41766
95000
340000
Total cost of department
140000
22200
27000
56766
105000
365000
Activity of department
Outpatient
OB
General
Total activity
Service department
Cost of department
Cost per activity (cost of department / total activity)
Meal consumed
0
8000
30000
38000
Cafeteria
140000
3.68421
Patient file kept
4000
1500
12500
18000
Administration
22200
1.23333
Laundry loads washed
1500
500
8000
10000
Laundry
27000
2.70000
Service department
Billing department
Cafeteria
Administration
Laundry
Outpatient
OB
General
Total
Total cost of department
140000
22200
27000
56766
105000
365000
715966
Meal consumed (activity of particulars billing department*3.68421)
-140000
0
29474
110526
0
Patient file kept (activity of particulars billing department*1.23333)
-22200
4933
1850
15417
0
Laundry loads washed (activity of particulars billing department*2.70)
-27000
4050
1350
21600
0
Total cost of department after allocation
0
0
0
65749
137674
512543
715966
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.