Question

Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for all departments in the hospital for the forthcoming quarter are presented in the table below:

	Service Departments				Operating Departments
	Housekeeping Services	Food Services	Administrative Services		Laboratory	Radiology	General Hospital	Total
Total cost	$96,000	$319,060	$267,020		$428,400	$556,500	$507,300	$2,174,280
Meals served			1,700		3,800	1,900	73,400	80,800
Square feet of space	5,900	15,700	8,300		12,700	8,400	117,000	168,000
Files processed					18,500	11,500	34,000	64,000

The costs of the service departments are allocated by the step-down method using the allocation bases and in the order shown in the following table:

Service Department	Allocation Bases
Housekeeping Services	Square feet of space
Food Services	Meals served
Administrative Services	Files processed

All billing in the hospital is done through Laboratory, Radiology, or General Hospital. The hospital’s administrator wants the costs of the three service departments allocated to these three billing centers.

Required:

Using the step-down method, prepare the cost allocation desired by the hospital administrator. Include under each billing center the direct costs of the center, as well as the costs allocated from the service departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Answer 1