Etobicoke Specialty Clinic (ESC) has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The Finance Section of ESC has compiled the following information: Department Direct Costs Square Feet #of Employees Housekeeping $200,000 3,000 500 Administration $400,000 5,000 250 Financial Services $300,000 2,000 100 Medicine $1,000,000 53,000 2,600 Surgery $1,500,000 40,000 2,300 The ESC has determined that the cost driver for the Housekeeping Department is square feet and that the cost driver for Administration and Financial Services is the number of employees. using the step-down method of cost allocation, Calculate the allocation of the Administration department’s costs to the Financial Services, Medicine, and Surgery departments. Assume Housekeeping costs are allocated first, followed by Administration Services.
Etobicoke Specialty Clinic (ESC) has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The Finance Section of ESC has compiled the following information:
|
Department |
Direct Costs |
Square Feet |
#of Employees |
|
Housekeeping |
$200,000 |
3,000 |
500 |
|
Administration |
$400,000 |
5,000 |
250 |
|
Financial Services |
$300,000 |
2,000 |
100 |
|
Medicine |
$1,000,000 |
53,000 |
2,600 |
|
Surgery |
$1,500,000 |
40,000 |
2,300 |
The ESC has determined that the cost driver for the Housekeeping Department is square feet and that the cost driver for Administration and Financial Services is the number of employees.
using the step-down method of cost allocation, Calculate the allocation of the Administration department’s costs to the Financial Services, Medicine, and Surgery departments. Assume Housekeeping costs are allocated first, followed by Administration Services.
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