(Appendix 4B) Muckenfuss 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 Geriatric Medicine. 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 Geriatric Medicine Department cost after allocations is closest to:
A) $122,608
B) $128,781
C) $128,158
D) $91,358

Question

(Appendix 4B) Muckenfuss 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 Geriatric Medicine. 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 Geriatric Medicine Department cost after allocations is closest to:
A) $122,608 
B) $128,781 
C) $128,158 
D) $91,358

Quizplus · Accepted Answer

Allocation base for Personnel costs = 27 + 104 + 160 = 291
Allocation base for IT costs = 85 + 87 = 172
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(Appendix 4B) Muckenfuss Clinic Uses the Step-Down Method to Allocate