The California Community Hospital has two service departments, Cafeteria and Housekeeping, and two operating departmentsSurgery and Outpatient. The hospital uses the direct method to allocate service department costs to operating departments. Itallocates Cafeteria costs based on the number of employees.Outpatient$360,00045,000CafeteriaHousekeeping$10,00015,000Surgery$140,00015,000TotalDepartmental costs before allocationNumber of employees$40,00020,000$550,000Knowledge Check 01How much Cafeteria cost should be allocated to the Surgery department?$6,316$8,000$30,000O $10,000

Cafeteria and Housekeeping are service departments. So their cost will be allocated to operating…

Answered: The California Community Hospital has…

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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Woodbury Hospital provided the following data for its three service departments and three operating departments. Total cost Meals served Square feet of space. Files processed Service Department Housekeeping Services Food Services Administrative Services Service Departments Housekeeping Food Administrative Services Services $ 87,000 $ 301,060 Services $ 249,020 800 6,500 5,000 Departmental costs before allocations Allocations: Allocation Bases Square feet of space Meals served Files processed Housekeeping Services costs Food Services costs The costs of the service departments are allocated by the step-down method using the allocation bases and in the order shown in the following table: Administrative Services costs Total costs after allocations 13,000 All billing in the hospital is done through Laboratory, Radiology, or General Hospital. The hospital's administrator wants the costs of the three service departments allocated to these three billing centers. Housekeeping Services $…

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