[ANSWER] Community Recovery Clinic – Cost Allocation

Question description

Community Recovery Clinic offers two
types of services: inpatient and outpatient. They have two types of service
departments: administration and housekeeping. Direct costs of nursing care and
supplies can be traced directly to the patient. 

of  Square
  Departments  Employees  Footage
  Inpatient  40  20.000
  Outpatient  20  10,000
  Administration  10  5,000 
  Housekeeping  5  5,000
costs for each department are as follows:
  Administration  $500,000
  Housekeeping  $200,000
is allocated based on number of employees and housekeeping is based on square
footage. Carry out calculations to four decimal places.

service department costs using the direct method.
service department costs using the reciprocal method.
is the other method of allocation?
discuss the pros and cons of each method and select the best one.

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