Behrend 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.
Service Department Operating Department
Personnel Support Prenatal Pediatrics
Departmental costs $27,000 $40,000 $247,200 $421,600
Employee hours 6,000 1000 15,000 5,000
Space occupied 4,000 2000 15,000 10,000
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:
Total Allocation Percentage = 5,000/(15,000+5,000) = .25
The following posting helps with problems involving management accounting. Concepts covered include allocated cost and total allocation percentage.