Wellspring Community Hospital has two patient service departments, medicine and surgery. The patient service departments are supported
Question:
Wellspring Community Hospital has two patient service departments, medicine and surgery. The patient service departments are supported by the housekeeping department, the financial services department, and the administration department. The administration department of Wellspring Community Hospital has compiled the following information:
Housekeeping
$200,000 direct costs
3,000 square feet
250 employees
Administration
$400,000 direct costs
5,000 square feet
500 employees
Financial services
$300,000 direct costs
2,000 square feet
100 employees
Medicine
$1 million direct costs
53,000 square feet
2,600 employees
Surgery
$1.5 million direct costs
40,000 square feet
2,300 employees
Wellspring has determined that the cost driver for housekeeping is square feet and that the cost driver for administration and financial services is the number of employees. Using the direct method of cost allocation, what is the approximate allocation rate for housekeeping costs? (Round to the nearest cent.)
a. $2.15
b. $1.94
c. $2.11
d. $2.00
e. $5.00
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman