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2.4

CHAPTER 6: DEPARTMENTAL COSTING AND COST ALLOCATION Homework Problem 2.4 The housekeeping department of Ruger Clinic, a multispecialty practice, had $100,000 in direct costs in 2020. These costs must be allocated to Ruger's three revenue-producing patient services departments. Two cost driver are under consideration: patient services revenue and hour of housekeeping services used. The patient services departments generated $5 million in total revenues during 2020, and to support these clinical activities, they used 5,000 hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate using patient services revenue as the cost driver? c. What is the allocation rate using housekeeping hours as the cost driver