1. 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?

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Patient Services Department Support Department Routine Care Laboratory Radiology Financial Services ($o.05556) x $16,000,000 = $ 888,960 x $5,000,000 = $ 277,800 x $6,000,000 = $ 333.360 Facilities ($12.64) 199,800 = 2,525,472 39,600 = 500,544 61,200 = 773.568 Housekeeping ($17.58) 76,000 = 1,336,080 6,000 = 105.480 9,000 = 158,220 Administration ($0.432) 5,709,000 = 2,466,288 2,035,000 = 879,120 2,439,000 = 1,053,648 Personnel ($0.250) 5,709,000 = 1,427,250 2,035,000 = 508,750 2,439,000 = 609,750 $ 8,644,050 $ 5.500,000 Total indirect costs $ 2,271,694 $ 2,928,546 Direct costs $ 3,300,000 $ 2,800,000 $ 14,144,050 $ 5.571,694 $ 5,728,546 Total costs Total indirect costs = $8,644,050 + $2,271,694 + $2,928,546 = $13,844,290 Total costs = $14,144,050 + $5,571,694 + $5,728,546 = $25,444,290