Hypes Clinic Uses the Direct Method to Allocate Service Department

question 28

Multiple Choice

Hypes Clinic uses the direct method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Support, and two operating departments, Prenatal and Pediatrics.
Personnel Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. The total Pediatrics Department cost after the allocations of service department costs is closest to:

• A) $1,036,914
• B) $1,036,040
• C) $1,024,310
• D) $1,033,809

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Definitions:

Trade-In Allowance

The amount credited to the buyer by the seller when the buyer gives a product as part of the payment for a new product.

Book Value

The net value of a company's assets as recorded on its financial statements, minus its liabilities and intangible assets.

Recorded

The process of entering financial transactions into accounting records.

Long-Lived Assets

Assets that are expected to provide economic benefits to a business for a period longer than one year, such as buildings, machinery, and equipment.