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2. The Housekeeping Service Department of Orlando Radiology Clinic had $60,000 in direct costs during the year. These costs must be allocated to the clinic's
2. The Housekeeping Service Department of Orlando Radiology Clinic had $60,000 in direct costs during the year. These costs must be allocated to the clinic's tree revenue-producing departments: Adult Radiology Services, Pediatric Radiology Services, and Other Radiology Services using the direct method. The radiology services revenue and hours of housekeeping services for each department are as follows: Department Adult Radiology Services Pediatric Radiology Services Other Radiology Services Total Revenues $1,200,000 600,000 200,000 $2,000,000 Housekeeping Hours 300 600 200 1,100 a. What is the dollar allocation to each radiology services department if patient services revenue is used as the cost driver to allocate housekeeping costs to revenue-producing departments? Hint: complete the following table: Allocation Rate Allocation Department Adult Radiology Services Pediatric Radiology Services Other Radiology Services Total Revenues $1,200,000 600,000 200,000 $2,000,000 b. What is the dollar allocation to each radiology services department if hours of housekeeping support are used as the cost driver? Hint: complete the following table: Hours Allocation Rate Allocation Department Adult Radiology Services Pediatric Radiology Services Other Radiology Services Total 300 600 200 1,100 $ c. Which of the two drivers is better? Please explain
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