Problem 12-43 Cost Distribution Using Allocation Bases; Hospital (LO 12-4) Rocky Mountain General Hospital serves three counties in Colorado. The hospital is a nonprofit organization that is supported by patient billings, county and state funds, and private donations. The hospital's organization is shown in the following chart Rocky Mountain General Hospital General Medicine Division Surgical Division Medical Support Division Administrative Division Nursing Department Nutrition Department Radiology and Laboratory Department Housekeeping Department Maintenance Department Registered Patient Kitchen The following table shows the cost allocation bases used to distribute various costs among the hospital's divisions. Cost Allocation Base Annual Cost Square feet of space $ 201, eee Cubic feet of space 35,000 Cost Pool Facilities: Building depreciation Equipment depreciation Insurance Utilities: Electricity Waste disposal Water and sewer Cable TV and phone teat General administration: Administrator Administrative staff Office supplies Community outreach: Public education School physical exams Budgeted number of employees 231 , Budgeted dollars of patient billings 51, eee Shown below are the amounts of each cost allocation base associated with each division General Medicine Division Surgical Division Medical Support Division Square Feet 16,320 11,220 12,240 Cubic Feet 173,400 127,500 112,200 Number of Employees 30 20 20 Patient Billings $2,250,000 1,350,000 900,000 Shown below are the amounts of each cost allocation base associated with each division. General Medicine Division Surgical Division Medical Support Division Administrative Division Total Square Feet 16,320 11,22e 12,240 11,220 51,080 Cubic Feet 173,400 127,500 112,200 96,900 510,000 Number of Employees 30 20 20 10e Patient Billings $2,25e, eee 1,350, eee 900,000 e $4,500,000 Required: 1. Prepare table that distributes each of the costs listed in the preceding table to the hospital's divisions. 2. Review the appropriateness of patient billings as the basis for distributing community Outreach costs to the hospital's divisions, what would be the best allocation base? 3. What are the benefits of allocating utility costs to the divisions? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a table that distributes each of the costs listed in the preceding table to the hospital's divisions. (Round "Percentage of Total answers to 2 decimal places. (.e., 0.1234 should be entered as 12.34) Required 1 Required 2 Required 3 Prepare a table that distributes each of the costs listed in the preceding table to the hospital's divisions. (Round "Percentage of Total answers to 2 decimal places. (.e., 0.1234 should be entered as 12.34)) Costs Cost Pool Division Allocation Base Percentage of Total Distributed Facilities General Medicine sq. ft. Surgical Medical Support Administrative Total % sq.ft Utilities cu. % General Medicine Surgical Medical Support Administrative Total cu. ft. % General administration General Medicine Surgical empl. 9 Total cu. ft. % General administration empi. % General Medicine Surgical Medical Support Administrative Total empl. % Community Outreach billings % General Medicine Surgical Medical Support Administrative Total billings % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Review the appropriateness of patient billings as the basis for distributing community Outreach costs to the hospital's divisions, wh: The wage earnings of each division's personnel. This base would reflect the employee costs for which work has been done for the program The number of hours spent by each division's personnel in community Outreach activities. This base would be more retective of the actual contributi The number of employees in each division. This base would be more reflective of the actual contribution of each division to the program 3. What are the benefits of allocating utility costs to the divisions? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What are the benefits of allocating utility costs to the divisions? (Select "Yes" if the statement is a benefit of allocating utility costs to the divisions, and "No" if it is not a benefit.) Third-party reimbursements, such as those from insurance companies are more accurate, Helps decrease overall costs It improves the profitability position of the various divisions Division managers are able to reflect the costs whon pricing services. It brings about a good coordination among the various divisions in the usage of utilities The fotal cost of running the division is reflected.