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Tacoma Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are as follows: Tacoma Hospital

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Tacoma Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are as follows: Tacoma Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are as follows: Direct Costs Cost Driver $2,000,000 Salary Dollar:s General Administration Facilities Financial Services Total $5,000,000 Housekeeping Labor Hours $3,000,000 Patient Services Revenue $10,000,000 nue, salary dollars, and housekeeping labor hours for each department are as The patient services reve follows: Revenue Salary Dollars Housekeeping Labor Hours General Administration Facilities Financial Services $1,500,000 $3,000,000 $2,000,000 2,000 5,000 3,000 Routine Care Intensive Care Diagnostic Services Other Services $30,000,000 $4,000,000 $6,000,000 $10,000,000 $12,000,000 $5,000,000 $6,000,000 $7,000,000 150,000 30,000 15,000 25,000 Assume that the hospital uses the step-down method for cost allocation (see pages 230 d 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 th general administration department provides the most services to other support departments, followed closely by the facities department. The financial services department provides the least services to t other support departments 232), with a. Use an allocation table to allocate the hospital's overhead costs to the patient services departmen b. s the direct met Please explain thod or the step-down method better for cost allocation within Tacoma Hospital's

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