Part A, 2

Next, make the allocation on the basis of the following data. Exhibit 3 shows data for square feet, housekeeping labor hours and salaries for each of the three production departments. First calculate an allocation rate (show your work), then allocate costs and calculate profit (including direct costs) for each of the production departments.Cost drivers and total cost pool for each support department is listed below:

Department	Cost Pool (Total Costs)	Cost Driver	Total Utilization
Financial Services	$ 1,500,000	Patient Revenue	$ 80,000,000
Facilities	$ 3,800,000	Square Feet	$ 300,600
Housekeeping	$ 1,600,000	Labor Hours	$ 91,000
Administration	$ 4,400,000	Salary Dollars	$ 10,183,000
Personnel	$ 2,550,000	Salary Dollars	$ 10,183,000

Read Appendix B to Chapter 12 before attempting this problem. See especially page 573-574. Also see the video for this part of the case. Prepare a schedule illustrating the allocation of support department costs to each of the production departments and calculate the total costs (allocated support department costs + direct costs) and the net income of each production department after all costs have been allocated.

Exhibit 3 Part A2
Department	Patient Services Revenue	Square Feet	Housekeeping Labor Hours	Salary Dollars
Primary Patient Care	$ 40,000,000	199,800	76,000	$ 5,709,000
Labs	$ 34,000,000	39,600	6,000	$ 2,035,000
Imaging	$ 6,000,000	61,200	9,000	$ 2,439,000
Total	$ 80,000,000	300,600	91,000	$ 10,183,000