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Return to the direct method of cost allocation and use the same cost drivers as specified in problem 6.4 for the general administration and facilities
Return to the direct method of cost allocation and use the same cost drivers as specified in problem 6.4 for the general administration and facilities departments. However, assume Now there are two functions that have been identified for Financial Services. The first function is billing and management reporting, so a reasonable cost driver for those expenses might be patient services revenue. (Perhaps number of bills would be better, but those data are not available.) The second function is payroll and personnel management. The best driver for that function (of the data available) might be salary dollars. Thus, the number of cost pools is now four rather than three. Here are the new allocation rates
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