St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are as follows: General Administration $2,000,000 Facilities $5,000,000 Financial Services $3,000,000 Selected data for the three support and four patient services departments are shown below:

Department Patient Services Revenues Space (square feet) Housekeeping Labor Hours Salary Dollars Support

General Administration 10,000 2,000 $ 1,500,000

Facilities 20,000 5,000 $ 3,000,000

Financial Services 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

Other 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

#1). Use the information for St. Benedict's. Use the direct method of cost allocation. Assume that $2,000,000 of financial services costs is related to billing and managerial reporting and $1,000,000 is related to payroll and personnel management activities. What is the allocation rate for the Financial Services cost pool allocated based on patient services revenues? Hint: Find the most appropriate cost driver. The $2,000,000 of the Financial Services cost is related to 'Billing and Managerial Reporting.' The cost driver will be Total Patient Services Revenue.