The following data pertain to problems 4.6 through 4.8 St. Benedict's Hospital has three support departments and four patient services ments. The direct costs to each support department are: General Administration Facilities Financial Services $2,00o,ooo 5,000,000 3,000,00o Selected data for the three support and four patient services departments are Patient Services Space Housekeeping Revenue (Square Feet) Labor Hours Salary Dollars Department Support General 2,000 1,500,000 10,000 Administration Facilities Financial Services Total 5,000 3,000 10,000 3,000,000 2,000,000 $6,500,000 20,000 15,000 Patient services Routine Care Intensive Care $12,000,0oo 5,000,000 6,000,000 7,000,000 $30,000,000 $30,000,00o 150,000 400,000o 40,000 60,000 100,000 600,000 30,000 15,000 25,000 220,000 4,000,000o Diagnostic Services 6,00o,000 6,oo Other Services Total 10,000,000 $50,000,00o Grand total $50,000,0oo 645,o00 $36,500,000 230,000 4.6 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 usage a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments.
The following data pertain to problems 4.6 through 4.8 St. Benedict's Hospital has three support departments and four patient services ments. The direct costs to each support department are: General Administration Facilities Financial Services $2,00o,ooo 5,000,000 3,000,00o Selected data for the three support and four patient services departments are Patient Services Space Housekeeping Revenue (Square Feet) Labor Hours Salary Dollars Department Support General 2,000 1,500,000 10,000 Administration Facilities Financial Services Total 5,000 3,000 10,000 3,000,000 2,000,000 $6,500,000 20,000 15,000 Patient services Routine Care Intensive Care $12,000,0oo 5,000,000 6,000,000 7,000,000 $30,000,000 $30,000,00o 150,000 400,000o 40,000 60,000 100,000 600,000 30,000 15,000 25,000 220,000 4,000,000o Diagnostic Services 6,00o,000 6,oo Other Services Total 10,000,000 $50,000,00o Grand total $50,000,0oo 645,o00 $36,500,000 230,000 4.6 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 usage a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 36E
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Assume that the hospital uses the direct method for cost allocation
Question: how to solve question a & b ?
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