The Rye Village Clinic provides primary health care to local residents. For costing purposes, the clinic classifies its departments into three operating departments (Clinic, Radiology, and Laboratory) and three support departments (Administration, Housekeeping, and Medical Records). The allocation of Administration costs is based on the percentage of time spent in the department. The allocation of Housekeeping costs is based on floor space. The allocation of Medical Records cost is based on the number of entries to patient files. For the first week of May, the department managers report the following data: House- Medical Admin. keeping Records Clinic Radiology Lab. Total Total costs [외 Time spent (percentage) Floor space (square feet) 250 50 200 800 500 400 2,200 10 10 20 30 20 10 100 1,000 2,500 5,000 3,000 2,000 14,000 500 Entries to patient files 500 1,500 4,500 500 2,000 Required: (a) Allocate the three support department costs to the three operating departments using the step- down method. The first ranked support department is Administration. The second ranked support department is Housekeeping. The third ranked support department is Medical Records. You can round your results to the nearest 10p. (b) What is the difference between the direct method and the step-down method?
The Rye Village Clinic provides primary health care to local residents. For costing purposes, the clinic classifies its departments into three operating departments (Clinic, Radiology, and Laboratory) and three support departments (Administration, Housekeeping, and Medical Records). The allocation of Administration costs is based on the percentage of time spent in the department. The allocation of Housekeeping costs is based on floor space. The allocation of Medical Records cost is based on the number of entries to patient files. For the first week of May, the department managers report the following data: House- Medical Admin. keeping Records Clinic Radiology Lab. Total Total costs [외 Time spent (percentage) Floor space (square feet) 250 50 200 800 500 400 2,200 10 10 20 30 20 10 100 1,000 2,500 5,000 3,000 2,000 14,000 500 Entries to patient files 500 1,500 4,500 500 2,000 Required: (a) Allocate the three support department costs to the three operating departments using the step- down method. The first ranked support department is Administration. The second ranked support department is Housekeeping. The third ranked support department is Medical Records. You can round your results to the nearest 10p. (b) What is the difference between the direct method and the step-down method?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 3BE
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![Question 1.
The Rye Village Clinic provides primary health care to local residents. For costing purposes, the clinic
classifies its departments into three operating departments (Clinic, Radiology, and Laboratory) and three
support departments (Administration, Housekeeping, and Medical Records). The allocation of
Administration costs is based on the percentage of time spent in the department. The allocation of
Housekeeping costs is based on floor space. The allocation of Medical Records cost is based on the
number of entries to patient files. For the first week of May, the department managers report the
following data:
House- Medical
Admin. keeping Records Clinic Radiology Lab. Total
Total costs
250
50
200
800
500
400
2,200
Time spent
[percentage]
10
10
20
30
20
10
100
Floor space
[square feet)
3,000 2,000 14,000
1,000
500
2,500 5,000
Entries to
patient files
500 1,500 4,500
500 2,000
Required:
(a) Allocate the three support department costs to the three operating departments using the step-
down method. The first ranked support department is Administration. The second ranked support
department is Housekeeping. The third ranked support department is Medical Records. You can round
your results to the nearest 10p.
(b) What is the difference between the direct method and the step-down method?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F68d53828-bdf4-49c9-bd0c-aec0cc8f5939%2F67dc17c5-52ed-4313-a906-9407498a9e62%2F95ys5vm_processed.png&w=3840&q=75)
Transcribed Image Text:Question 1.
The Rye Village Clinic provides primary health care to local residents. For costing purposes, the clinic
classifies its departments into three operating departments (Clinic, Radiology, and Laboratory) and three
support departments (Administration, Housekeeping, and Medical Records). The allocation of
Administration costs is based on the percentage of time spent in the department. The allocation of
Housekeeping costs is based on floor space. The allocation of Medical Records cost is based on the
number of entries to patient files. For the first week of May, the department managers report the
following data:
House- Medical
Admin. keeping Records Clinic Radiology Lab. Total
Total costs
250
50
200
800
500
400
2,200
Time spent
[percentage]
10
10
20
30
20
10
100
Floor space
[square feet)
3,000 2,000 14,000
1,000
500
2,500 5,000
Entries to
patient files
500 1,500 4,500
500 2,000
Required:
(a) Allocate the three support department costs to the three operating departments using the step-
down method. The first ranked support department is Administration. The second ranked support
department is Housekeeping. The third ranked support department is Medical Records. You can round
your results to the nearest 10p.
(b) What is the difference between the direct method and the step-down method?
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