Refer to the organization chart for Mount Ranier General Hospital given in the preceding problem. Ignore the rest of the data in that problem. The following table shows the cost application bases used to distribute various costs among the hospital’s divisions.

Shown below are the amounts of each cost allocation base associated with each division.

1. Prepare a table similar to Exhibit 12–5 which distributes each of the costs listed in the preceding table to the hospital’s divisions.
2. Comment on the appropriateness of patient billings as the basis for distributing community outreach costs to the hospital’s divisions. Can you suggest a better allocation base?
3. Is there any use in allocating utilities costs to the divisions? What purposes could such an allocation process serve?
4. Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: the costs incurred were $400,000, $50,000, $400,000, and $90,000, for facilities, utilities, general administration, and community outreach,respectively.

  • CreatedApril 22, 2014
  • Files Included
Post your question