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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.

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
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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