Zoopsia Hospital Has Two Service Departments and Three Operating Departments

question 16

Multiple Choice

Zoopsia Hospital has two service departments and three operating departments. Selected information on the five departments for last year is as follows: Zoopsia allocates Power Generation cost first on the basis of kilowatt hours. Zoopsia then allocates Laundry cost on the basis of the number of employees. Operating costs in Power Generation for last year were $250,000. Operating costs in Laundry for last year were $60,000. No distinction is made between variable and fixed costs.
-If service department costs are allocated using the direct method, what is the total amount of service cost that would be allocated to the Emergency Room?

• A) $147,100
• B) $161,000
• C) $182,750
• D) $192,250

---

Definitions:

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Tax Reporting

The process of filing income, sales, and other tax returns accurately and timely to comply with governmental regulations.

Excess Capacity

A situation where a company can produce more goods than the market demands, indicating underused resources or a need for adjustment in production levels.

Selling Price

The amount of money for which a product or service is sold to the consumer, not necessarily reflective of the total price or production costs.