drivers between the two d. Which of the two drivers is better? Why? The following data pertain to problems 6.3 through 6.6 St. Benedict's Hospital has three support departments and four patient ser departments. The direct costs to each of the support departments are as fol General Administration Facilities Financial Services $2,000,000 5,000,000 3,000,000 Selected data for the three support and four patient services departments shown below: are Patient Space Services (square Housekeeping Salary Revenue feet) LaborHours Dollars ent Support: General 10,000 2,000 1,500,000 20,000 5,000 3,000,000 10,0006,500,000 Administration Facilities Financial Services 15,000 45,000 3,000 2,000,000 Total Patient Services Routine Care $30,000,000 400,000 150,000 $12,000,000 Intensive Care Diagnostic Services 6,000,000 60,000 15,000 Other Services 10,000,000 100,00025,000 4,000,000 40,000 30,000 5,000,000 6,000,000 7,000,000 Total S50,000,000 600,000220,000 $30,000,000 Grand Total 50,000,000 645,000 230,000 $36,500,000 6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments drivers between the two d. Which of the two drivers is better? Why? The following data pertain to problems 6.3 through 6.6 St. Benedict's Hospital has three support departments and four patient ser departments. The direct costs to each of the support departments are as fol General Administration Facilities Financial Services $2,000,000 5,000,000 3,000,000 Selected data for the three support and four patient services departments shown below: are Patient Space Services (square Housekeeping Salary Revenue feet) LaborHours Dollars ent Support: General 10,000 2,000 1,500,000 20,000 5,000 3,000,000 10,0006,500,000 Administration Facilities Financial Services 15,000 45,000 3,000 2,000,000 Total Patient Services Routine Care $30,000,000 400,000 150,000 $12,000,000 Intensive Care Diagnostic Services 6,000,000 60,000 15,000 Other Services 10,000,000 100,00025,000 4,000,000 40,000 30,000 5,000,000 6,000,000 7,000,000 Total S50,000,000 600,000220,000 $30,000,000 Grand Total 50,000,000 645,000 230,000 $36,500,000 6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments
