a. What are the apporpriate allocation rates Support General Admin Budget % $ 2,000,000.00 Facilities Financial...

Transcribed Image Text:

a. What are the apporpriate allocation rates Support General Admin Budget % $ 2,000,000.00 Facilities Financial Total $ 5,000,000.00 20.00% 50.00% 30.00% $ 3,000,000.00 $10,000,000.00 b. Use the allocation table similar to the one used for problem 6.3 to allocate the hospital's overhead costs to the patient services departments. Department Revenues Housekeeeping Salary Revenues General Admin Facilities Financial Services Total Support Space (sqft) 10000 20000 2000 $ 1,500,000 5000 $ 3,000,000 15000 3000 $ 2,000,000 45000 10000 $ 6,500,000 Space (sqft) Housekee Salary 1.55% 0.87% 4.11% 3.10% 2.17% 8.22% 2.33% 1.30% 5.48% 6.98% 4.35% 17.81% Patient Care Routine $ 30,000,000 400000 150000 $ 12,000,000 Intensive $ 4,000,000 40000 30000 $ 5,000,000 60.00% 8.00% Diagnostic $ 6,000,000 60000 15000 $ 6,000,000 12.00% Other $ 10,000,000 100000 Total Services $ 50,000,000 600000 Grand total $ 50,000,000 645000 25000 $ 7,000,000 220000 $ 30,000,000 230000 $ 20.00% 100.00% 36,500,000 62.02% 65.22% 32.88% 6.20% 13.04% 13.70% 9.30% 6.52% 16.44% 15.50% 10.87% 19.18% 93.02% 95.65% 82.19% 100.00% 100.00% 100.00% c. Compare the dollar allocations with those obtained in problem d. Which departments are allocated more overhead costs? Which are allocated less? e. Which of the two cost driver schemes is better? Explain your answer. a. What are the apporpriate allocation rates Support General Admin Budget % $ 2,000,000.00 Facilities Financial Total $ 5,000,000.00 20.00% 50.00% 30.00% $ 3,000,000.00 $10,000,000.00 b. Use the allocation table similar to the one used for problem 6.3 to allocate the hospital's overhead costs to the patient services departments. Department Revenues Housekeeeping Salary Revenues General Admin Facilities Financial Services Total Support Space (sqft) 10000 20000 2000 $ 1,500,000 5000 $ 3,000,000 15000 3000 $ 2,000,000 45000 10000 $ 6,500,000 Space (sqft) Housekee Salary 1.55% 0.87% 4.11% 3.10% 2.17% 8.22% 2.33% 1.30% 5.48% 6.98% 4.35% 17.81% Patient Care Routine $ 30,000,000 400000 150000 $ 12,000,000 Intensive $ 4,000,000 40000 30000 $ 5,000,000 60.00% 8.00% Diagnostic $ 6,000,000 60000 15000 $ 6,000,000 12.00% Other $ 10,000,000 100000 Total Services $ 50,000,000 600000 Grand total $ 50,000,000 645000 25000 $ 7,000,000 220000 $ 30,000,000 230000 $ 20.00% 100.00% 36,500,000 62.02% 65.22% 32.88% 6.20% 13.04% 13.70% 9.30% 6.52% 16.44% 15.50% 10.87% 19.18% 93.02% 95.65% 82.19% 100.00% 100.00% 100.00% c. Compare the dollar allocations with those obtained in problem d. Which departments are allocated more overhead costs? Which are allocated less? e. Which of the two cost driver schemes is better? Explain your answer.