Clopton Clinic Uses the Step-Down Method to Allocate Service Department

question 20

Multiple Choice

Clopton Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT) , and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.
-In the first step of the allocation, the amount of Personnel Department cost allocated to the Family Medicine Department is closest to:

• A) $20,285
• B) $17,929
• C) $18,560
• D) $39,774

Understand the concept and implications of perfect price discrimination by monopolists.

Relate the concepts of consumer surplus and deadweight loss to the efficiency of monopolies and perfectly competitive firms.

Understand the concept of price discrimination and its impact on consumer groups.

Analyze the effect of perfect price discrimination on economic welfare, consumer surplus, and profits.

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Definitions:

Negative Externalities

Costs that result from an activity or transaction and affect third parties who did not choose to incur that cost.

Quantity Decrease

A reduction in the amount or number of a particular good or service that is available or being produced.

Efficiency Losses

The reduction in economic efficiency due to imbalances or distortions in the market, often manifesting as excess or insufficient production and consumption.

Output Level

The quantity of goods or services produced by a firm or economy in a given period.