Allocate cost of service centers to operating departments step method Jenkins He
ID: 2492885 • Letter: A
Question
Allocate cost of service centers to operating departments step method Jenkins Health Care Center has three clinics servicing the Seattle metropolitan area. The company's legal services department supports the clinics. Moreover its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $256,000. The annual cost of operating the computer services department is $480,000. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services.Other relevant information follows: number of patient(NP) number of workstation(NW) cobb clinic 6,000(NP) 18(NW) victoria clinic 4,200(NP) 16(NW) pied clinic 5,800(NP) 18(NW) legal servic 8(NW) computer serv 10(NW) Required: a) Allocate the cost of computer services to all of the clinics and the legal services department. b) after allocating the cost of computer services, allocate the cost of legal services to the three clinics. c) Compute the total allocated cost of service center for each clinic.
Explanation / Answer
Answer:a)
Allocation rate=Computer service cost/No. of workstation
=$480000/60=$8000 per workstation
Answer:b
Allocation rate=Legal service cost/No. of Patients
=($256000+$64000)/16000=$20 per patients
Answer:c
Department Allocation rate Weight of base Allocated cost cobb clinic 8000 18 144000 victoria clinic 8000 16 128000 pied clinic 8000 18 144000 Legal service 8000 8 64000 Total allocated costs 480000Related Questions
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