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The Metropolitan Clinic Has Two Service Departments (S1 and S2)

question 34

Multiple Choice

The Metropolitan Clinic has two service departments (S1 and S2) and two "production" departments (P1 and P2) . The service departments service the "production" departments as well as each other, and studies have shown that S2 provides the greater amount of service. Which of the following choices correctly denotes an allocation that would not occur under (1) the direct method and (2) the step-down method of cost allocation?  Direct Method Step-Down Method \begin{array}{llcc} \quad\quad\quad\quad\quad\underline{\text { Direct Method }} & \quad\quad\quad\quad\quad\quad\quad\underline{\text {Step-Down Method }} \\\end{array}
A.  S1’s cost would be allocated to P1. S1’s cost would be allocated to P1 \begin{array}{llcc} \text { S1's cost would be allocated to P1. } & \text {S1's cost would be allocated to P1 } \\\end{array}

B.  P1’s cost would be allocated to P2.  P1’s cost would be allocated to P2 \begin{array}{llcc} \text { P1's cost would be allocated to P2. } & \text { P1's cost would be allocated to P2 } \\\end{array}

C. S2’s cost would be allocated to S1.  S2’s cost would be allocated to S1. \begin{array}{llcc} \text {S2's cost would be allocated to S1. } & \text { S2's cost would be allocated to S1. } \\\end{array}

D.  P1’s cost would be allocated to S1  P1’s cost would be allocated to S1. \begin{array}{llcc} \text { P1's cost would be allocated to S1 } & \text { P1's cost would be allocated to S1. } \\\end{array}

E.  None of the other answers are correct. \begin{array}{llcc} \text { None of the other answers are correct.} & \text { } \\\end{array}

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Thyroid Gland

A butterfly-shaped gland located in the neck that produces hormones regulating metabolism, energy generation, and body temperature.

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The narrowing of the blood vessels resulting from contraction of the muscular wall of the vessels, which increases blood pressure.

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Pertaining to the heart and blood vessels, relating to the system that circulates blood throughout the body.

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An extensive network of neurons and supporting tissues that processes information in the body through electrical and chemical signals.

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