Duda 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)$163,616
B)$188,179
C)$194,726
D)$194,717

Question

Duda 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)$163,616 
B)$188,179 
C)$194,726 
D)$194,717

Quizplus · Accepted Answer

Allocation base for Personnel costs = 25 + 110 + 183 = 318
Allocation base for IT costs = 81 + 136 = 217
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Duda Clinic Uses the Step-Down Method to Allocate Service Department