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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