Stazenski Children's Clinic Allocates Service Department Costs to Operating Departments

question 35

Multiple Choice

Stazenski Children's Clinic allocates service department costs to operating departments using the step-down method.The clinic has two service departments,Administration and Information Technology (IT) ,and two operating departments,Prenatal and Pediatric.Data concerning those departments follow: Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.The total Pediatric Department cost after allocations is closest to:

• A)$435,029
• B)$390,920
• C)$434,832
• D)$423,486

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Definitions:

Variance

An index of variability in a set of data, established by taking the average squared deviation from the mean.

Tchebysheff's Theorem

A theorem that states for any real numbers k > 1, at least (1-1/k^2) of the data values fall within k standard deviations of the mean for any distribution.

Empirical Rule

A statistical rule stating that for a normally distributed dataset, about 68% of values fall within one standard deviation, 95% within two, and 99.7% within three standard deviations from the mean.

Tchebysheff's Theorem

A mathematical formula that determines the minimum proportion of values that lie within a specified number of standard deviations from the mean, for any distribution.