Kirby Health Care Center, Inc. has three clinics servicing the Seattle metropolitan area. The company's legal services department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $200,000. The annual cost of operating the computer services department is $360,000. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Kirby Health Care Center, Inc. has three clinics servicing the Seattle metropolitan area. The company's legal services
department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal
services department. The annual cost of operating the legal services department is $200,000. The annual cost of
operating the computer services department is $360,000. The company uses the number of patients served as the cost
driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating
the cost of computer services. Other relevant information follows.
Number of Number of
Sewell clinic
Alphretta clinic
Gwinnett clinic
Legal services
Computer services
Patients
6,000
4,200
5,800
Workstations
18
16
18
8
10
Required
a.) Allocate the cost of computer services to all of the clinics and the legal services department.
b.) After allocating the cost of computer services, allocate the cost of legal services to the three clinics.
c.) Compute the total allocated cost of service centers for each clinic.
Transcribed Image Text:Kirby Health Care Center, Inc. has three clinics servicing the Seattle metropolitan area. The company's legal services department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $200,000. The annual cost of operating the computer services department is $360,000. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows. Number of Number of Sewell clinic Alphretta clinic Gwinnett clinic Legal services Computer services Patients 6,000 4,200 5,800 Workstations 18 16 18 8 10 Required a.) Allocate the cost of computer services to all of the clinics and the legal services department. b.) After allocating the cost of computer services, allocate the cost of legal services to the three clinics. c.) Compute the total allocated cost of service centers for each clinic.
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