• Completethe following items listed in the Week 2 Reading and Preparation object:ReadChapters 4-5 in Gapenski (2013).
• ViewtheWeek 2 Presentations.
• Respondto the following prompt by 11:59 p.m. on the due date listed above.Many hospitals use square footage to allocate housekeeping costs. The rationale, of course, is that one patient services department that is twice as big as another will require twice the expenditure of housekeeping resources. The advantage of this cost driver is that it is easy to measure and typically remains constant for a relatively long period (department space allotments do not change very often).
• The disadvantage of using square footage as the cost driver is that some patient services departments require more housekeeping support per square foot of occupied space because of the nature of the service that the department provides. For example, emergency departments require more intense housekeeping services than do neonatal care units, and surgical suites require more intense services than do routine care departments.
• What do you think? Is a more effective cost driver available for allocating housekeeping costs than square footage? If so, what is it? Describe how the suggested cost driver might work.

Replyto at least two of your classmates responses by the following

Complete the following items listed in the Week 2 Reading and Preparation object: Read Chapters 4-5 in Gapenski (2013). View the Week 2 Presentations. Respond to the following prompt by 11:59 p.m. on the due date listed above. Many hospitals use square footage to allocate housekeeping costs. The rationale, of course, is that one patient services department that is twice as big as another will require twice the expenditure of housekeeping resources. The advantage of this cost driver is that it is easy to measure and typically remains constant for a relatively long period (department space allotments do not change very often). The disadvantage of using square footage as the cost driver is that some patient services departments require more housekeeping support per square foot of occupied space because of the nature of the service that the department provides. For example, emergency departments require more intense housekeeping services than do neonatal care units, and surgical suites require more intense services than do routine care departments. What do you think? Is a more effective cost driver available for allocating housekeeping costs than square footage? If so, what is it? Describe how the suggested cost driver might work. Reply to at least two of your classmates' responses by the following Sunday at 11:59 p.m. Housekeeping Costs and Square Footage Many hospitals use square footage to allocate housekeeping costs. The rationale, of course, is that one patient services department that is twice as big as another will require twice the expenditure of housekeeping resources. The advantage of this cost driver is that it is easy to measure and typically remains constant for a relatively long period (department space allotments do not change very often). The disadvantage of using square footage as the cost driver is that some patient services departments require more housekeeping support per square foot of occupied space because of the nature of the service that the department provides. For example, emergency departments require more intense housekeeping services than do neonatal care units, and surgical suites require more intense services than do routine care departments. What do you think? Is a more effective cost driver available for allocating housekeeping costs than square footage? If so, what is it? Describe how the suggested cost driver might work. Gina Parsons (parsons.2160) 5 days ago. In his text, Fundamentals of Healthcare Finance, Gapenski explains that many hospitals use square footage as the cost driver used to allocate housekeeping costs. Square footage is used in many cases because it is easy to measure and typically remains constant for a relatively long period of time. However, the square footage statistic does not always provide an accurate representation of the services received, which is a major disadvantage to using it as an accurate and effective cost driver to allocate housekeeping costs. To me, this indicates the use of square footage statistics as the cost driver for allocating housekeeping costs should be carefully reviewed for appropriateness before being used simply because they are easy to measure and relatively constant over time. Otherwise, the use of square footage statistics could cause unreasonable allocations of housekeeping costs, making it less effective as a cost driver. Since the criteria for a cost driver to be effective is that the cost driver (1) provides the most accurate cause-and-effect relationship between the use of housekeeping services and the costs of the Housekeeping Department and (2) creates an incentive to use less housekeeping service, I believe there is a more effective cost driver available for allocating housekeeping costs than square footage. Labor hours - or, the hours of housekeeping services required by the clinic's departments may be more difficult to measure, but ultimately meets the criteria for an effective cost driver more than square footage does. Labor hours would work as an effective cost driver because labor hours provides a more accurate cause-and-effect relationship between the use of services and the costs of the department using those services. Hence, housekeeping costs would be allocated more fairly amongst the various patient services' departments based on their use of these support services. The use of labor hours as the cost driver will allocate the greatest amount of overhead costs to those patient services departments that actually use the most overhead services, and would create incentives for department heads to use less overhead services. The advantages of using labor hours, even if they are more difficult to measure than square footage, as the cost driver for the allocation of housekeeping resources are that the hospital at large is left with more accurate cost information, which leads to better decisions. Additionally, increased knowledge of production activities leads to process improvements and ultimately, reduced costs. References: Gapenski, L. C. (2013). Fundamentals of Healthcare Finance (2nd ed.). Arlington, VA: Health Administration Press. ISBN: 978-1-56793-475-5 Reply0 Zeribe Ezeanuna (ezeanuna.7375) 4 days ago. Hi Gina, Good post, I agree with your statement that says "square footage statistic does not always provide an accurate representation of the services received". I think that statement alone hits the nail on the head why square footage is not a good cost driver. Because using cost driver to predicted the amount of resources, is very narrow in thought as it does not directly relate to the consumer of the resources, it relates to the building that harbors the consumers, which is not that beneficial to the prediction and allocation of resources. As mentioned, square footage does meet some of the criteria of a cost driver, however, it is clear that there are many other cost drivers better-suited t perform this task. Lastly, I think your suggestion of using labor hours is a better option as it does directly correlate with the service and consumers being serviced and in need of the resources being considered. Listowell Sarfo Ababio (sarfoababio.8876) 4 days ago. Cost allocation can be defined as the process where cost is identified, aggregated, and assigned to cost objects. These objects are activities or items for which a system wants to measure cost (Bragg, 2013). An example of such cost objects in the health care system are patient services, research projects, pharmacy services, housekeeping services, to name a few. Cost allocation is therefore an integral part of health care management because it directs overhead costs assignment to departments involved in the creation of such costs (Gapenski,2013). For our example, housekeeping activity is an example of a cost object, or a cost pool, for which cost can be allocated. An obvious and fair cost driver for housekeeping is labor hours, more effective than square footage. This is because there exists a strong correlation between labor hours and overhead expenditure of housekeeping. Some departments might have a large square footage but few labor hours of housekeeping than other departments; emergency department and pediatric intensive care unit(PICU) respectively. Assume a hospital has a cost pool of $200,000 and a total cost driver of 40,000 labor hours. The cost rate will therefore be $5 per hour of housekeeping provided. The emergency department with 4,000 and PICU with 2,000, labor hours of housekeeping would be allocated $20,000 and $10,000 cost respectively. I equally believe that work-shift could also be a good cost driver. What I mean by shift-work is, for example, every department in a setting needs some housekeeping so employees can rotate without necessarily been concern with work intensity and hours. Cost allocation in this case can easily be measured because cost will be fixed for all housekeeping workers creating a common ledger for everybody. This will save the organization resources which includes time and money. Reference: Bragg, S. (2013). Cost Allocation. Retrieved on July 11, 2017 from https://www.accountingtools.com/articles/what-is-cost-allocation.html Gapenski, L. C. (2013). Fundamentals of Healthcare Finance (2nd ed.). Arlington, VA: Press. Health Administration