A Community Hospital has two (2) service departments: Maintenance and Food Services. The hospital has three (3) patient care units, namely: General Medicine, OB, and Surgery.

Additional information are as follows:

• Amount of cost to be allocated:

Maintenance	8,000,000
Food Services	3,000,000

• Allocation method:

a) Maintenance Costs are allocated based on square foot assigned to the unit.

b) Food Service Costs are allocated based on number of meals served to the unit.

EXPECTED UTILIZATION RATES
	SQ. FT	Meals Served
Food Services	10,000	30,000
Maintenance	10,000	10,000
Surgery	20,000	40,000
OB	30,000	30,000
General Medicine	30,000	90,000
TOTAL	100,000	200,000

REQUIRED:

1. Using the information, allocate the costs of the two (2) service units using: Direct Method, Step Method - Maintenance First, Step Method - Food Services First, and Reciprocal Method.

DIRECT METHOD
	ALLOCATED MAINTENANCE COST	ALLOCATED FOOD SERVICE COSTS
Food Services
Maintenance
Surgery
OB
General Medicine

STEP METHOD - MAINTENANCE FIRST
	ALLOCATED MAINTENANCE COST	ALLOCATED FOOD SERVICE COSTS
Food Services
Maintenance
Surgery
OB
General Medicine

STEP METHOD - FOOD SERVICES FIRST
	ALLOCATED MAINTENANCE COST	ALLOCATED FOOD SERVICE COSTS
Food Services
Maintenance
Surgery
OB
General Medicine

ALGEBRAIC METHOD

Answer rating: 100% (QA)

1 Direct Method Allocated Maintenance Cost 8000000 100000 Square F... View the full answer