I am having difficulties with the following two part chapter review problem:

Use the following data to answer the question 6.3 (a&b):

St. Benedict's Hospital has three support departments and four patient services departments. The direct cost to each of the support departments is as follows:

General Administration $2,000,000

Facilities $5,000,000

Financial Services $3,000,000

Selected data for the three support and four patient service departments are shown below:

Department Patient Services Revenue Square feet Housekeeping Labor Hours Salary dollars

Support:

General Admin 10,000 2,000 $1,5000,000

Facilities 20,000 5,000 3,000,000

Financial Services 15,000 3,000 2,000,000

Total 45,000 10,000 6,500,000

Patient Services:

Routine Care $30,000,000 400,000 150,000 $12,000,000

Intensive Care 4,000,000 40,000 30,000 5,000,000

Diagnostic Services 6,000,000 60,000 15,000 6,000,000

Other Services 10,000,000 100,000 25,000 7,000,000

Total $50,000,000 600,000 220,000 $30,000,000

GRAND TOTAL $50,000,000 645,000 230,000 $36,500,000

6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services and patient services revenue, while the cost driver for facilities is space utilization.

a.) What are the appropriate allocation rates?

b.) Use the table below to allocate the hospitals overhead costs to the patient services departments. Fill in the chart below:

Support Department Allocation Rate Routine Care Intensive Care Diagnostic Services Total

General Admin _____________ ___________ _____________ __________________ _________

Facilities _____________ ___________ _____________ __________________ _________

Financial Services _____________ ___________ ____________ __________________ _________

Total Indirect Costs _____________ ___________ ____________ __________________ __________