Please use Data for step-down cost allocation

St. Benedict's Hospital has three support departments and four patient services departments.The direct costs for each of the support departments are as follows:

Department Direct Costs of Support Departments

General Administration $2,000,000

Facilities $5,000,000

Financial Services $3,000,000

Total $10,000,000

Selected data for the three support and four patient services departments are shown below:

Department Patient Services Revenue Space (Sq Feet) Housekeeping Labor Hour Salary Dollars

Support:

General Administration N/A 10,000 2,000 $1,500,000

Facilities N/A 20,000 5,000 $3,000,000

Financial Services N/A 15,000 3,000 $2,000,000

Total 45,000 10,000 $6,500,000

Patient Services:

Routine Care $30,000,000 400,000 150,000 $12,000,000

Intensive Care $4,000,000 40,000 30,000 $5,000,000

Diagnostic Services $6,000,000 60,000 15,000 $6,000,000

Others Services $10,000,000 100,000 25,000 $7,000,000

Total $50,000,000 600,000 220,000 $30,000,000

Grand Total $50,000,000 645,000 230,000 $36,500,000

Question:6.5. Assume that the hospital uses the step-down method for cost allocation, with salary dollars as the cost driver for general administration, housekeeping labor hours as the cost driver for facilities, and patient services revenue as the cost driver for financial services.Assume also that the general administration department provides the most services to other support departments, followed closely by the facilities department.The financial services department provides the least services to other support departments.

6.5.a. Use a step-down allocation table to allocate the hospital's overhead costs to the patient services departments