Question

Kirby Health Care Center, Inc. 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 $200,000. The annual cost of operating the computer services department is $360,000. 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		Number of
	Patients		Workstations
Sewell clinic	6,000		18
Alphretta clinic	4,200		16
Gwinnett clinic	5,800		18
Legal services			8
Computer services			10

Required

1. Allocate the cost of computer services to all of the clinics and the legal services department.

2. After allocating the cost of computer services, allocate the cost of legal services to the three clinics.

3. Compute the total allocated cost of service centers for each clinic.

Answer 1