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:

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.

Transcribed Image Text:

Service Departments Operating Departments Housekeeping General Services Food Services Admin. Services Laboratory Radiology Hospital Total Total cost . $87,000 $301,060 $249,020 $405,900 $520,500 $475,800 $2,039,280 71,800 Meals served 800 2,000 1,000 68,000 Square feet of space Files processed 7,500 7,000 5,000 13,000 6,500 10,000 108,000 150,000 14,000 25,000 46,000