St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to...
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St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each support department are: General Administration Facilities Financial Services Selected data for the three support and four patient services departments are as follows: Patient Services Revenue Department Support: General Administration Facilities Financial Services Total Patient Services: Routine Care Intensive Care Diagnostic Services Other Services Total Grand total $30,000,000 4,000,000 6,000,000 10,000,000 $50,000,000 $2,000,000 5,000,000 3,000,000 $50,000,000 Space (Square Feet) 10,000 20,000 15,000 45,000 400,000 40,000 60,000 100,000 600,000 645,000 Housekeeping Labor Hours 2,000 5,000 3,000 10,000 150,000 30,000 15,000 25,000 220,000 230,000 Salary Dollars $1,500,000 3,000,000 2,000,000 $6,500,000 $12,000,000 5,000,000 6,000,000 7,000,000 $30,000,000 $36,500,000 4.6 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for General Administration and Financial Services is patient services revenue, while the cost driver for Facilities is space utilization. a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments. St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each support department are: General Administration Facilities Financial Services Selected data for the three support and four patient services departments are as follows: Patient Services Revenue Department Support: General Administration Facilities Financial Services Total Patient Services: Routine Care Intensive Care Diagnostic Services Other Services Total Grand total $30,000,000 4,000,000 6,000,000 10,000,000 $50,000,000 $2,000,000 5,000,000 3,000,000 $50,000,000 Space (Square Feet) 10,000 20,000 15,000 45,000 400,000 40,000 60,000 100,000 600,000 645,000 Housekeeping Labor Hours 2,000 5,000 3,000 10,000 150,000 30,000 15,000 25,000 220,000 230,000 Salary Dollars $1,500,000 3,000,000 2,000,000 $6,500,000 $12,000,000 5,000,000 6,000,000 7,000,000 $30,000,000 $36,500,000 4.6 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for General Administration and Financial Services is patient services revenue, while the cost driver for Facilities is space utilization. a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments.
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To allocate the hospitals overhead costs to the patient services departments using the direct method we need to calculate the allocation rates for each of the support departments based on their respec... View the full answer
Related Book For
Cost Management Measuring Monitoring And Motivating Performance
ISBN: 9781118168875
2nd Canadian Edition
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook
Posted Date:
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