CHAPTER 6: DEPARTMENTAL COSTING AND COST ALLOCATION Homework Problem 2.5 St. Benedict Hospital has three primary revenue producing departments (inpatient, Outpatient, Clinic) with the following revenue and cost projections. In order to better determine the departments overall true cost and profit margin, management wants to allocate service department costs as overhead allocations to these departments. Show Work. PROJECTED REVENUES AND COSTS PER DEPARTMENT $ Revenues Inpatient Services Outpatient Services Clinic Services Total revenues 18,500,000 32,600.000 6,250,000 37,350,000 $ $ Direct Costs Inpatient Services Outpatient Services Clinic Services 9,275,000 18,250,000 4,500,000 32,025,000 Total costs $ Service Department Costs Financial Services $ 4.750,000 Facilities 8,500,000 Housekeeping 2.750,000 General Administration 3,500,000 Total overhead costs $ 19,300,000 Total Costs 31.525,000 Projected Profit 3,825,000 Management considered various cost drivers and made the determination to use the following as the most relevant for each service department: Department Financial Services Facilities Housekeeping General Administration Cost Driver Patient revenue Square feet Housekeeping his Salary dollars utlization information for allocations: Cost Driver Patient Revenue Square Feet Housekeeping Hours Salary Dollars Inpatient $18,500,000 255,000 90,000 $6,500,000 Outpatient $32.600,000 175,000 55,000 $9,000,000 Clinis $6,250,000 65,000 30,000 $2,500,000 Total $57,350,000 495.000 173,000 $18,000,000 a. Use Exhibit 6.5 as a guideto complete this table and alculate the allocation rates. Be sure to use Excel functions/formulas to show your work. Department Cost Pool Amount Cost Driver Total Utilization Allocation Rate Financial Services Facilities Housekeeping General Administration Total b. Use Exhibit 6.7 as a guide to complete the indirect cost allocations to each patient service ares. Indirect Cost Allocations Inpatient Outpatient Clinic Financial Services Facilities Housekeeping General Administration Total Indirect costs Outpatient Clinic Total Using Exhibit 6.8 as a guide, complete the P&L projections below. PSL Inpatient Revenue Direct Costs Indirect costs Total Costs Profit using only Direct Costs Profit margins only Direct Costs Profit using Total Costs Profit margins using Total Costs