Pleasant View Hospital has three service departments€”Food Services, Administrative Services, and X-ray Services. The costs of these departments are allocated by the step-down method, using the allocation bases and in the order shown below:

Estimated cost and operating data for all departments in the hospital for the forthcoming month are presented in the following table:

All billing in the hospital is done through the Outpatient Clinic, OB Care, or General Hospital. The hospital€™s administrator wants the costs of the three service departments allocated to these three billing centers.

Required:
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 servicedepartments.

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Costs Incurred Service Department Food Services Variable Meals served Administrative Services Base for Allocation Fixed Peak-period needs Variable Fixed S 10% X-ray Services, 20% Outpatient Clinic, 30% OB Care, and 40% General Hospital Fixed Peak-period needs Food Admin. X-Ray Outpatient Services Services Services Clinic General OB Care Hospital Total 48,000 33,040 59,520 26,958 99,738 344,744 612,000 1,000 2% 7,000 30,000 80% 900 12,000 8,400 84% 38,500 100% 17,400 9,950 100% 1% 1,500 Percent of peak-period Food Services needs.. 17% 3,000 1,200 13% 350 3% Percent of peak-period X-ray Services needs