St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each
Question:
St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are:
General Administration | $153,550 |
Facilities | 452,469 |
Financial Services | 294,467 |
Selected data for the three support and four patient services departments are:
Department | Patient Services Revenue | Space (Square Feet) | Housekeeping Labor Hours | Salary Dollars |
Support | ||||
General Administration | 1,129 | 213 | 169,273 | |
Facilities | 21,602 | 5,129 | 3,019,327 | |
Financial Services | 1,314 | 260 | 228,133 | |
Patient Services | ||||
Routine Care | $2,734,466 | 44,302 | 14,196 | 1,169,347 |
Intensive Care | 425,989 | 4,482 | 3,233 | 496,465 |
Diagnostic Services | 500,991 | 6,047 | 1,414 | 615,529 |
Other Services | 909,019 | 8,294 | 2,207 | 631,162 |
Assume that the hospital uses the step-down method for cost allocation, with salary dollars as the cost driver for general administration, housekeeping labor hours as the cost driver for facilities, and patient services revenue as the cost driver for financial services. Assume also that the general administration department provides the most services to other support departments, followed closely by the facilities department. The financial services department provides the least services to the other support departments.
Given these data, what percentage of the financial services department costs will be allocated to the routine care department?
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn