Reddicks 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 Pediatrics.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 Pediatrics Department cost after allocations is closest to:
A) $345,462
B) $393,099
C) $392,838
D) $383,307

Question

Reddicks 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 Pediatrics.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 Pediatrics Department cost after allocations is closest to:
A) $345,462 
B) $393,099 
C) $392,838 
D) $383,307

Quizplus · Accepted Answer

Allocation base for Personnel costs = 26 + 128 + 188 = 342
Allocation base for IT costs = 125 + 156 = 281
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Reddicks Clinic Uses the Step-Down Method to Allocate Service Department