Duda Clinic uses the step-down method to allocate service department costs to op

Question

Duda Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: (Do not round intermediate calculations.) Service Department Operating Department Family Geriatric Medicine| Medicine $29,200329,140 $146,54 Personnel IT $61,920 24 25 Departmental costs Employees PCs 35 36 130 79 158 Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Geriatric Medicine Department cost after allocations is closest to Multiple Choice $205,249 $168,434

Explanation / Answer

Cost allocation :

so answer is d) 205260

Personnel IT Family medicine Geriatric medicine Total cost 61920 29200 329140 146540 Allocation of personnel department exp -61920 5600 20800 35520 Allocation of IT department cost -34800 11600 23200 Total 361540 205260

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