22) Romain Surgical Hospital uses the direct method to allocate service department costs to
operating departments. The hospital has two service departments, Information Technology and
Administration, and two operating departments, Surgery and Recovery.
Service Department
Operating Department
Information
Technology
Administration
Surgery
Departmental costs
$25,956
$36,356
$563,640
Computer workstations
20
17
54
Employees
15
13
95
Information Technology Department costs are allocated on the basis of computer workstations
and Administration Department costs are allocated on the basis of employees.
The total amount of Information Technology Department cost allocated to the two operating
departments is closest to:
A) $18,019
B) $109,015
C) $21,587
D) $25,956
23) Romain Surgical Hospital uses the direct method to allocate service department costs to
operating departments. The hospital has two service departments, Information Technology and
Administration, and two operating departments, Surgery and Recovery.
Service Department
Operating Department
Information
Technology
Administration
Surgery
Departmental costs
$25,956
$36,356
$563,640
Computer workstations
20
17
54
Employees
15
13
95
Information Technology Department costs are allocated on the basis of computer workstations
and Administration Department costs are allocated on the basis of employees.
The total Surgery Department cost after service department allocations is closest to:
A) $598,249
B) $608,636
C) $602,727
D) $605,827
24) Seidell Corporation has two service departments, Administrative and Facilities, and two
operating departments, Assembly and Customer Solutions.
Service Department
Operating Department
Administrative
Facilities
Assembly
Customer
Solutions
Departmental costs
$43,560
$54,720
$561,960
$253,030
Employee hours
4,000
2,000
27,000
17,000
Space occupied
1,000
2,000
37,000
1,000
The company uses the direct method to allocate service department costs to operating
departments. Administrative costs are allocated on the basis of employee hours and Facilities
costs are allocated on the basis of space occupied.
The total amount of Administrative Department cost allocated to the Assembly Department is
closest to:
A) $26,730
B) $25,568
C) $42,414
D) $23,522
25) Seidell Corporation has two service departments, Administrative and Facilities, and two
operating departments, Assembly and Customer Solutions.
Service Department
Operating Department
Administrative
Facilities
Assembly
Customer
Solutions
Departmental costs
$43,560
$54,720
$561,960
$253,030
Employee hours
4,000
2,000
27,000
17,000
Space occupied
1,000
2,000
37,000
1,000
The company uses the direct method to allocate service department costs to operating
departments. Administrative costs are allocated on the basis of employee hours and Facilities
costs are allocated on the basis of space occupied.
The total Customer Solutions Department cost after the allocations of service department costs is
closest to:
A) $269,175
B) $254,470
C) $270,593
D) $271,300
26) Maute Clinic has two service departments, Administrative and Support, and two operating
departments, Adult Medicine and Pediatrics.
Service Department
Operating Department
Administrative
Support
Adult
Medicine
Pediatrics
Departmental costs
$23,600
$51,480
$259,690
$288,790
Employee hours
3,000
2,000
26,000
16,000
Space occupied
3,000
2,000
38,000
6,000
The clinic uses the direct method to allocate service department costs to operating departments.
Administrative 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 amount of Administrative Department cost allocated to the Adult Medicine Department
is closest to:
A) $13,636
B) $14,610
C) $20,382
D) $15,340
27) Maute Clinic has two service departments, Administrative and Support, and two operating
departments, Adult Medicine and Pediatrics.
Service Department
Operating Department
Administrative
Support
Adult
Medicine
Pediatrics
Departmental costs
$23,600
$51,480
$259,690
$288,790
Employee hours
3,000
2,000
26,000
16,000
Space occupied
3,000
2,000
38,000
6,000
The clinic uses the direct method to allocate service department costs to operating departments.
Administrative 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:
A) $302,436
B) $304,070
C) $304,136
D) $295,810
28) Prestwich Corporation has two service departments and two operating departments. Costs of
the Building and Grounds service department are allocated to other departments on the basis of
square feet of space occupied. The departments in the company and the amount of space
occupied by each are presented below:
Building and Grounds
2,000
square feet
Cafeteria
8,000
square feet
Operating Department A
20,000
square feet
Operating Department B
30,000
square feet
Budgeted costs in the Building and Grounds department total $34,800 for the year.
Assuming the step-down method is used and Building and Grounds costs are allocated first, the
amount of Building and Grounds costs allocated to the Cafeteria would be:
A) $0
B) $4,800
C) $4,640
D) $5,568
29) Prestwich Corporation has two service departments and two operating departments. Costs of
the Building and Grounds service department are allocated to other departments on the basis of
square feet of space occupied. The departments in the company and the amount of space
occupied by each are presented below:
Building and Grounds
2,000
square feet
Cafeteria
8,000
square feet
Operating Department A
20,000
square feet
Operating Department B
30,000
square feet
Budgeted costs in the Building and Grounds department total $34,800 for the year.
The amount of Building and Grounds department cost allocated to Operating Department A
under the direct method would be:
A) $0
B) $11,600
C) $12,000
D) $13,920
30) The James Corporation has four departments with data as follows:
Service Departments
Operating
Department
Cafeteria
Maintenance
Milling
Finishing
Budgeted costs
$12,000
$10,000
$42,000
$38,000
Number of employees
12
10
84
66
Labor hours
1,500
1,250
5,250
4,750
Maintenance Department costs are allocated on the basis of labor hours. The amount of cost
allocated to Milling from Maintenance under the direct method would be:
A) $5,600
B) $6,720
C) $5,250
D) $5,700
31) The James Corporation has four departments with data as follows:
Service Departments
Operating
Department
Cafeteria
Maintenance
Milling
Finishing
Budgeted costs
$12,000
$10,000
$42,000
$38,000
Number of employees
12
10
84
66
Labor hours
1,500
1,250
5,250
4,750
Cafeteria costs are allocated on the basis of number of employees. If the step-down method is
used with costs of the Cafeteria allocated first, the amount of cost allocated from the Cafeteria to
Maintenance would be:
A) $0
B) $625
C) $698
D) $750
32) Watts Corporation has a Custodial Services Department that services the company’s
Maintenance Department and its two operating departments. Costs of the Custodial Services
Department are allocated to other departments on the basis of square feet of space occupied. The
amount of space occupied by each department is given below:
Custodial Services
4,000
square feet
Maintenance
6,000
square feet
Operating Department 1
30,000
square feet
Operating Department 2
60,000
square feet
Budgeted costs in the Custodial Services Department total $43,200.
Suppose the company uses the step-down method of allocation and the costs of the Custodial
Services Department are allocated first. The amount of Custodial Services Department cost
allocated to the Maintenance Department would be:
A) $2,592
B) $2,700
C) $2,880
D) $0
33) Watts Corporation has a Custodial Services Department that services the company’s
Maintenance Department and its two operating departments. Costs of the Custodial Services
Department are allocated to other departments on the basis of square feet of space occupied. The
amount of space occupied by each department is given below:
Custodial Services
4,000
square feet
Maintenance
6,000
square feet
Operating Department 1
30,000
square feet
Operating Department 2
60,000
square feet
Budgeted costs in the Custodial Services Department total $43,200.
Suppose the company uses the direct method of allocation. The amount of Custodial Services
Department cost allocated to Operating Department 2 would be:
A) $25,920
B) $27,000
C) $28,800
D) $21,600
34) Anchor Corporation has two service departments, Personnel and Engineering, and two
operating departments. The costs of the Personnel Department are allocated to other departments
on the basis of the number of employees in the departments. Departments and number of
employees are as follows:
Employees
Personnel Department
10
Engineering Department
20
Operating Department 1
75
Operating Department 2
95
Total employees
200
Costs in the Personnel Department total $168,283 per year.
Suppose the company uses the step-down method and Personnel Department costs are allocated
first. The amount of the Personnel Department cost allocated to the Engineering Department
would be closest to:
A) $16,828
B) $17,714
C) $0
D) $112,189
35) Anchor Corporation has two service departments, Personnel and Engineering, and two
operating departments. The costs of the Personnel Department are allocated to other departments
on the basis of the number of employees in the departments. Departments and number of
employees are as follows:
Employees
Personnel Department
10
Engineering Department
20
Operating Department 1
75
Operating Department 2
95
Total employees
200
Costs in the Personnel Department total $168,283 per year.
Suppose the company uses the direct method of allocation. The amount of Personnel Department
cost that would be allocated to Operating Department 2 would be closest to:
A) $0
B) $84,141.50
C) $79,934.43
D) $94,040.50
36) San Juan Minerals (SJM) has two service departments and two operating departments.
Operating data for these departments for last year are as follows:
Service Departments
Operating Departments
Maintenance
Cafeteria
Mining
Processing
Departmental costs
$
48,000
$
45,000
$
70,000
$
130,000
Machine hours
2,000
1,000
11,000
9,000
Number of employees
40
30
400
360
Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria
costs are allocated on the basis of number of employees. SJM does not distinguish between
variable and fixed overhead costs.
Assuming that SJM allocates service department costs using the direct method, the total cost
allocated from Maintenance to Processing would be closest to:
A) $21,600
B) $18,783
C) $26,400
D) $20,571
37) San Juan Minerals (SJM) has two service departments and two operating departments.
Operating data for these departments for last year are as follows:
Service Departments
Operating Departments
Maintenance
Cafeteria
Mining
Processing
Departmental costs
$
48,000
$
45,000
$
70,000
$
130,000
Machine hours
2,000
1,000
11,000
9,000
Number of employees
40
30
400
360
Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria
costs are allocated on the basis of number of employees. SJM does not distinguish between
variable and fixed overhead costs.
Assuming that SJM allocates service department costs using the direct method, the total cost
allocated from Cafeteria to Mining would be closest to:
A) $21,687
B) $15,750
C) $23,684
D) $22,500
38) San Juan Minerals (SJM) has two service departments and two operating departments.
Operating data for these departments for last year are as follows:
Service Departments
Operating Departments
Maintenance
Cafeteria
Mining
Processing
Departmental costs
$
48,000
$
45,000
$
70,000
$
130,000
Machine hours
2,000
1,000
11,000
9,000
Number of employees
40
30
400
360
Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria
costs are allocated on the basis of number of employees. SJM does not distinguish between
variable and fixed overhead costs.
Assume that SJM uses the step-down method to allocate service department costs, starting with
Maintenance. The total overhead allocated from Maintenance to Mining would be closest to:
A) $25,143
B) $22,957
C) $51,150
D) $16,800
Service Departments
Cafeteria
Mining
Departmental costs
$
45,000
$
70,000
$
130,000
Allocation:
(1/21,11/21,9/21)
(400/760,360/760)
allocation
39) San Juan Minerals (SJM) has two service departments and two operating departments.
Operating data for these departments for last year are as follows:
Service Departments
Operating Departments
Maintenance
Cafeteria
Mining
Processing
Departmental costs
$
48,000
$
45,000
$
70,000
$
130,000
Machine hours
2,000
1,000
11,000
9,000
Number of employees
40
30
400
360
Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria
costs are allocated on the basis of number of employees. SJM does not distinguish between
variable and fixed overhead costs.
Assume that SJM uses the step-down method to allocate service department costs, starting with
Maintenance. The total overhead allocated from Cafeteria to Processing would be closest to:
A) $21,316
B) $22,398
C) $21,279
D) $23,643
Service Departments
Cafeteria
Mining
Departmental costs
$
45,000
$
70,000
$
130,000
Allocation:
(1/21,11/21,9/21)
(400/760,360/760)
allocation
40) Strzelecki Corporation uses the step-down method to allocate service department costs to
operating departments. The company has two service departments, Service Department A and
Service Department B, and two operating departments, Operating Department X and Operating
Department Y. Data concerning those departments follow:
Service Departments
Operating Departments
Service
Department A
Service
Department B
Operating
Department X
Operating
Department Y
Departmental
costs
$
37,800
$
45,780
$
247,360
$
304,330
Allocation base
A
5,000
1,000
29,000
15,000
Allocation base
B
5,000
2,000
39,000
3,000
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.
In the first step of the allocation, the amount of Service Department A cost allocated to the
Operating Department X is closest to:
A) $24,360
B) $21,924
C) $16,948
D) $24,914