Georgeson Emergency Care Hospital Uses the Step-Down Method to Allocate

question 20

Essay

Georgeson Emergency Care Hospital uses the step-down method to allocate service department costs to operating departments.The hospital has two service departments,Administration and Information Technology (IT),and two operating departments,Emergency Room and Intensive Care.
Administration Department costs are allocated first on the basis of employees and IT Department costs are allocated second on the basis of computers.
Required:
Allocate the service department costs to the operating departments using the step-down method.

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Definitions:

Four Pinions

Describes a gear assembly configuration that includes four pinion gears, often found in differential assemblies to evenly distribute torque to the wheels.

Truck Differential

A mechanical device in a truck that allows the outer drive wheel to rotate faster than the inner drive wheel during a turn, improving traction and handling.

Tandem Drive Truck

A truck with two rear axles, both of which are drive axles, providing better traction and load distribution.

Spinout

Occurs when differential action allows one drive wheel on a slippery surface to spin while the other remains stationary and receives no driving torque. On tandem drive trucks, because of the additional differential action between the drive axles, it is possible to turn a spinning wheel at four times its normal speed. This can take out the interaxle differential or carrier differential. Spinout is a driver abuse failure of differential carriers.