Reddicks Clinic Uses the Step-Down Method to Allocate Service Department

question 4

Multiple Choice

Reddicks Clinic uses the step-down method to allocate service department costs to operating departments.The clinic has two service departments,Personnel and Information Technology (IT) ,and two operating departments,Family Medicine and Pediatrics.Data concerning those departments follow:
Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.The total Pediatrics Department cost after allocations is closest to:

• A) $345,462
• B) $393,099
• C) $392,838
• D) $383,307

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Absolute Value

The distance of a number from zero on the number line, without considering direction.

Money Income

Refers to the total amount of monetary income received by an individual or household over a certain period of time, including wages, salaries, bonuses, and any other income in cash forms.

Factors of Production

The resources used in the production of goods and services, typically categorized into land, labor, capital, and entrepreneurship.