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Exam 9: Service Department Allocations

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Question 31

Multiple Choice

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The total Pediatrics Department cost after the allocations of service department costs is closest to:

A) $521,388
B) $519,234
C) $509,100
D) $521,700

E) B) and D)
F) A) and D)

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Question 32

Multiple Choice

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The total amount of Information Technology Department cost allocated to the two operating departments is closest to:

A) $28,679
B) $32,334
C) $23,391
D) $126,849

E) C) and D)
F) None of the above

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Question 33

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Mitri Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Finishing. Administrative Department costs are allocated on the basis of employee hours and Facilities Department costs are allocated on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the direct method.

The total Fabrication Department cost after service department allocations is closest to:

Dubey Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery. Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees. The total Surgery Department cost after service department allocations is closest to:

Vercher Natal Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal Care and Postnatal Care. Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers. Required: Allocate the service department costs to the operating departments using the step-down method.

The total Corporate Law Department cost after allocations is closest to:

Vota Clinic uses the direct method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Support, and two operating departments, Prenatal and Pediatrics. Personnel Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. The total Pediatrics Department cost after the allocations of service department costs is closest to:

Stoffle Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing. Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:

Vitro Corporation has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. The company uses the step-down method to allocate service department costs to operating departments. Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.Required: Allocate the service department costs to the operating departments using the step-down method.

In the first step of the allocation, the amount of Administration Department cost allocated to the Assembly Department is closest to:

Bagley Corporation has two service departments and two operating departments. The space occupied by each department follows: The fixed costs of Custodial Services are allocated on the basis of square feet. If these costs are budgeted at $38,000, the amount of cost allocated to General Administration under the direct method would be:

The order in which the costs of service departments are allocated will affect the amounts allocated to an operating department when the step-down method is used.

The total Finishing Department cost after allocations is closest to:

In the first step of the allocation, the amount of Service Department A cost allocated to the Operating Department X is closest to:

The step-down method of allocation is simpler and easier to apply than the direct method.