Black Ash Eye and Throat Hospital allocates service department costs to operating departments using the...
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Accounting
Black Ash Eye and Throat Hospital allocates service department costs to operating departments using the step-down method. The hospital has two service departments, Administration and Information Technology (IT), and two operating departments, Eye and Throat. Data concerning those departments follow:
Service Department Operating Department
Admin. IT Eye Throat
Departmental costs
80,000 Admin.
65,000 IT
500,600 Eye
350,000 Throat
# of Employees:
15 Admin
60 IT
150 Eye
90 Throat
Work Stations:
20 Admin
30 IT
40 Eye
? Throat
Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of Work Stations. After allocation, the Eye Department found out that their total departmental cost is $567,600. How many work stations does the Throat Department have?
A. 113 work stations
B. 60 work stations
C. 80 work stations
D. 24 work stations
E. None of the above
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