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

6.4. Assume that the hospital uses salary dollars as the cost driver for general administration, housekeeping labor hours as the cost driver for facilities, and patient services revenue for the cost driver for financial services.The majority of the costs of the facilities department stem from the provision of housekeeping services.

6.4 a. What are the appropriate allocation rates?

6.4.a. (1). Assume that the hospital uses salary dollars as the cost driver for general administration.

What is the appropriate allocation rate for general administration?

6.4.a. (2). Assume that the hospital uses housekeeping labor hours as the cost driver for facilities.The majority of the costs of the facilities department stem from the provision of housekeeping services. What is the appropriate allocation rate for facilities?

6.4.a. (3). Assume that the hospital uses patient services revenue for the cost driver for financial services.What is the appropriate allocation rate for financial service