ng services most closely related to the w she clinic will en ent mana ction action plications vices depan srces, who y Organiza of effective allocation. nie are SE DICE COM wording these services. The intent here, of course, is to pick housekeeping services and the costs of the housekeeping er that provides the most accurate cause-and-effect relationship Rr 2021, Prairie View's managers estimate that the housekeep will provide 10,000 hours of service to the departments that pool and cost driver have been defined and ma- that the cost cation rate is established by dividing the expected total over- pool) by the expected total volume of the cost driver $10 per hour of services provided. 10,000 hours Allocation Rate warlocation of an overhead cost pool. To illustrate, assume the Metion rate is the rate used to calculate each receiving depart- services department has $1,000,000 in total costs (the cos Therefore, the allocation rate is $2 per bill: als total, the patient services departments generate 500,000 bill Cost pool amount Cost driver volume ng Ger keeping s will ation. ovided. driver). Alocation rate = 5 ent $1,000,000 = 500,000 bills $2 per bill. 532/ Chapter 6: Departmental Costing and Cost Allocat Department Adult services Pediatric services Other services Total Revenue $3,000,000 1,500,000 500,000 $5,000,000 Housekeeping Hours 1,500 3,000 500 5,000 2. What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver? b. What is the dollar allocation to each patient services department if hours of housekeeping support is used as the cost driver? What is the difference in the allocation to each department between the two drivers? 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 services departments. The direct costs to each of the ng services most closely related to the w she clinic will en ent mana ction action plications vices depan srces, who y Organiza of effective allocation. nie are SE DICE COM wording these services. The intent here, of course, is to pick housekeeping services and the costs of the housekeeping er that provides the most accurate cause-and-effect relationship Rr 2021, Prairie View's managers estimate that the housekeep will provide 10,000 hours of service to the departments that pool and cost driver have been defined and ma- that the cost cation rate is established by dividing the expected total over- pool) by the expected total volume of the cost driver $10 per hour of services provided. 10,000 hours Allocation Rate warlocation of an overhead cost pool. To illustrate, assume the Metion rate is the rate used to calculate each receiving depart- services department has $1,000,000 in total costs (the cos Therefore, the allocation rate is $2 per bill: als total, the patient services departments generate 500,000 bill Cost pool amount Cost driver volume ng Ger keeping s will ation. ovided. driver). Alocation rate = 5 ent $1,000,000 = 500,000 bills $2 per bill. 532/ Chapter 6: Departmental Costing and Cost Allocat Department Adult services Pediatric services Other services Total Revenue $3,000,000 1,500,000 500,000 $5,000,000 Housekeeping Hours 1,500 3,000 500 5,000 2. What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver? b. What is the dollar allocation to each patient services department if hours of housekeeping support is used as the cost driver? What is the difference in the allocation to each department between the two drivers? 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 services departments. The direct costs to each of the
