Make allocations based on the the following data. The table shows the data for s

Question

Make allocations based on the the following data. The table shows the data for square feet, housekeeping labor hours and salaries for each of the three production departments. First calculate an allocation rate (show work), then allocate costs and calculate profit (with direct costs) for each of the production departments. Cost drivers and total cost pool for each support department is listed below:

Prepare a schedule illustrating the allocation of support department costs to each of the production departments and calculate the total costs (allocated support department costs + direct costs) as well as the net income of each production department after all costs have been allocated.

Cost Pool Total Costs Total Utilization Department Financial Services Cost Driver Patient Revenue 1,500,000 80,000,000 Facilities 3,800,000 Square Feet 300,6 00 Housekeeping 1,600,000 Administration 4,400,000 Personnel Labor Hours Salary Dollars Salary Dollars 91,000 10,183,000 10,183,000 2,550,000

Explanation / Answer

Solution:-

80,000,000

(40,000,000 : 34,000,000 : 6,000,000)

300,600

(199,800 : 39,600 : 61,200)

91,000

(76,000 : 6,000 : 9,000)

10,183,000

(5,709,000 : 2,035,000 : 2,439,000)

10,183,000

(5,709,000 : 2,035,000 : 2,439,000)

Please Rate or comment if you have any doubt regarding this solution.

Statement of cost pool Overhead Amount Basis Qty. Cost/activity Financial service 1,500,000 Patienty revenue

80,000,000

(40,000,000 : 34,000,000 : 6,000,000)

0.01875 Facilities 3,800,000 Square feet

300,600

(199,800 : 39,600 : 61,200)

12.641 Housekeeping 1,600,000 Labor hours

91,000

(76,000 : 6,000 : 9,000)

17.582 Administration 4,400,000 Salary dollars

10,183,000

(5,709,000 : 2,035,000 : 2,439,000)

0.432 Personnel 2,550,000 Salary dollars

10,183,000

(5,709,000 : 2,035,000 : 2,439,000)

0.250

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