A Community Hospital has two (2) service departments: Maintenance and Food Services. The hospital has three (3) patient care units, namely: General Medicine, OB, and Surgery.   Additional information are as follows:   Amount of cost to be allocated:   Maintenance P 8,000,000 Food Services P 3,000,000   Allocation method: Maintenance Costs are allocated based on square foot assigned to the Food Service Costs are allocated based on number of meals served to the   EXPECTED UTILIZATION RATES   SQ. FT. Meals Served Food Services 10,000 30,000 Maintenance 10,000 10,000 Surgery 20,000 40,000 OB 30,000 30,000 General Medicine 30,000 90,000 TOTAL 100,000 200,000   Using the information, allocate the costs of the two (2) service departments with the three (3) patient care units using: Direct Method, Step Method – Maintenance First, Step Method – Food Services First, and Reciprocal Method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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A Community Hospital has two (2) service departments: Maintenance and Food Services. The hospital has three (3) patient care units, namely: General Medicine, OB, and Surgery.

 

Additional information are as follows:

 

  • Amount of cost to be allocated:

 

Maintenance

P 8,000,000

Food Services

P 3,000,000

 

  • Allocation method:
    1. Maintenance Costs are allocated based on square foot assigned to the
    2. Food Service Costs are allocated based on number of meals served to the

 

EXPECTED UTILIZATION RATES

 

SQ. FT.

Meals Served

Food Services

10,000

30,000

Maintenance

10,000

10,000

Surgery

20,000

40,000

OB

30,000

30,000

General Medicine

30,000

90,000

TOTAL

100,000

200,000

 

  1. Using the information, allocate the costs of the two (2) service departments with the three (3) patient care units using: Direct Method, Step Method – Maintenance First, Step Method – Food Services First, and Reciprocal Method.
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