Question
The housekeeping department of Ruger Clinic, a multispecialty physician practice, had $100,000 in direct costs during 2018. These costs must be allocated to Ruger's three
The housekeeping department of Ruger Clinic, a multispecialty physician practice, had $100,000 in direct costs during 2018. These costs must be allocated to Ruger's three revenue-producing patient services departments. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5 million in total revenues during 2018, and to support these activities, they used 5,000 hours of housekeeping services. Assume that Ruger chose to use hours of housekeeping services used as the cost driver.
How much in housekeeping overhead costs would be allocated to a patient services department that used 1,000 hours of housekeeping in 2018
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