d. Which of the two del The fellowing data pertain to problems 6.3 throngh 6.6 S

Question

d. Which of the two del The fellowing data pertain to problems 6.3 throngh 6.6 St. Benedict's Hospital has three support departments a departments. The direct costs to each of the support de and four patien $2,000,000 3,000,000 ents are as General Administration Facilities Financial Services d. ~5,000,000 Selected data for the three support and four patient services de shown below 6.5( th No Patient Space Services (square Housekeeping Department Revenue feet) Labor Hourssalary Support fac se pr cle 10,000 2,000 S 1,500,000 Administration Facilities Financial Services 20,000 5,000 3,0000 3,000 2,000,000 45,000 10,000 6,500,000 15,000 b. Total 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 6,000,00 7,000,000 50,000,000 600,000 220,000 $30,000,000 S50,000,000 645,000 230,000 $36,500,000 6.6 R dr Total Grand Total 6.3 Assume that the hospital uses the direct method for cost allocato Furthermore, the cost driver for general administration an services is patient services revenue, while the cost driver for facilities space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to alloc hospital's overhead costs to the patient services departin ate the

Explanation / Answer

Answer for 6.3a:

Allocation rates as per direct cost allcoation is as follows:

Answer for question no.6.3.b:

Particulars Costs(1) Total cost driver(2) Cost per unit of cost driver=(1)/(2) General administration 2000000 50000000 0.04 Facilities 5000000 600000 8.33333333 Financial services 3000000 50000000 0.06

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