Chapter 04 – Appendix B Service Department Allocations
38. The total Corporate Law Department cost after allocations is closest to:
Chapter 04 – Appendix B Service Department Allocations
4B-34
Essay Questions
39. Konosh Medical Clinic has two service departments, Building Services and Energy, and
three operating departments, Pediatrics, Geriatrics, and Surgery. Konosh allocates the cost of
Building Services on square footage and Energy on patient days. No distinction is made
between variable and fixed costs. Budgeted operating data for last year follow:
Required:
a. Prepare a schedule to allocate service department costs to operating departments by the
direct method. (Round all dollar amounts to the nearest whole dollar.)
b. Prepare a schedule to allocate service department costs to operating departments by the
step-down method, allocating Building Services first. (Round all dollar amounts to the nearest
whole dollar.)
Chapter 04 – Appendix B Service Department Allocations
Chapter 04 – Appendix B Service Department Allocations
40. Voltaire 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.
Chapter 04 – Appendix B Service Department Allocations
41. Mask Corporation uses the direct method to allocate its two service department costs to its
two operating departments. Data concerning those departments follow:
Service Department A costs are allocated on the basis of allocation base A and Service
Department B costs are allocated on the basis of allocation base B.
Required:
Allocate the service department costs to the operating departments using the direct method.
Chapter 04 – Appendix B Service Department Allocations
42. The direct method is used by Savela Clinic to allocate its service department costs to its
operating departments. Data concerning those departments follow:
Information Technology costs are allocated on the basis of computers and Personnel costs are
allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct method.
43. Essex Consultancy uses the direct method to allocate its service department costs to its
operating departments. The company has two service departments, Information Technology
and Administration, and two operating departments, Corporate Practice and Government
Practice. Data concerning those departments follow:
Information Technology Department costs are allocated on the basis of computers and
Administration Department costs are allocated on the basis of employees.
Required:
Allocate the service department costs to the operating departments using the direct method.
Chapter 04 – Appendix B Service Department Allocations
44. Flinders Company has two service departments, Factory Administration and Maintenance,
and two operating departments. Selected information relating to these departments is given
below:
The company allocates service department costs by the step-down method. Factory
Administration costs are allocated first on the basis of number of employees, and then
Maintenance costs are allocated on the basis of total labor hours.
Required:
Prepare a schedule showing the allocation of service department costs to other departments.
Chapter 04 – Appendix B Service Department Allocations
45. 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.
Chapter 04 – Appendix B Service Department Allocations
46. Sobczynski Corporation uses the step-down method to allocate service department costs to
operating departments. The company has two service departments, Administration and
Facilities, and two operating departments, Assembly and Finishing.
Administration Department costs are allocated first on the basis of employee time and
Facilities Department costs are allocated second on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the step-down
method.
47. Grahe Emergency Care Hospital uses the step-down method to allocate service
department costs to operating departments. The hospital has two service departments,
Administration and Information Technology (IT), and two operating departments, Emergency
Room and Intensive 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.
Chapter 04 – Appendix B Service Department Allocations
48. Chrisler 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.