CCara Mia Hospital has two service departments and three operating departments. Selected information on the five departments for last year is as follows:
Kilowatt Number of
Hours Employees
Service Departments:
Power Generation ..... ---- 90
Laundry .................. 190,000 ----
Operating Departments:
Emergency Room ..... 475,000 378
Maternity ................. 209,000 189
Intensive Care .......... 76,000 63
Annual operating costs in Power Generation is $250,000. In Laundry they are $60,000. Cara Mia allocates Power Generation cost first on the basis of kilowatt hours. Cara Mia then allocates Laundry cost on the basis of the number of employees.
Use the information above to answer the following questions. Show your computations on the scratch paper provided (see last page of exam). Place your final answers in the spaces provided.
Assume Cara Mia Hospital uses the direct method of cost allocation for its service departments. What is the total amount of service cost that would be allocated to the Emergency Room? Show and clearly label your calculations and final answer in the box below.
Assume Cara Mia Hospital uses the step method of cost allocation for its service departments. What is the total amount of service cost that would be allocated to Maternity? Show and clearly label your calculations and final answer in the box below.
Assume Cara Mia Hospital uses the reciprocal method of cost allocation for its service departments. What is the total amount of service cost that would be allocated to Intensive Care? Show and clearly label your calculations and final answer in the box below.