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Bennett Clinic has two patient service (mission) departments, internal medicine and pediatrics. These departments are supported by the finance department, the housekeeping department, and the
Bennett Clinic has two patient service (mission) departments, internal medicine and pediatrics. These departments are supported by the finance department, the housekeeping department, and the general administration department. The following data have been assembled by the practice manager. Department Direct Costs # of housekeeping hours # of invoices/bills FTEs General Administration $ 200,000 30 50 2 Finance $ 150,000 50 20 3 Housekeeping $ 100,000 50 100 5 Internal Medicine $ Pediatrics $ 500,000 650,000 100 2000 10 150 2500 15 Assume the clinic uses a step-down method of cost allocation with general administration first, finance second and housekeeping third. The practice manager has determined that the cost driver for housekeeping is the number of housekeeping hours, the cost driver for finance is the number of invoices/bills generated, and the cost driver for general administration is FTEs. Using the step- down method, allocate all support (service) department costs to the patient service (mission) departments and determine each mission department's total (full) costs. A partial template has been provided below for your convenience. You don't have to use the template if you don't want to. You can make your own. Allocation Bases (Cost Drivers) General Admin Finance Housekeeping
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