Question
The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, has $100,000 in direct costs during 2015. These costs must be allocated
The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, has $100,000 in direct costs during 2015. These costs must be allocated to Ruger's three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5million in total revenues during 2015. To support these clinical activities, the departments used 5,000 hours of housekeeping services.
What is the allocation rate if hours of housekeeping services is used as the cost driver?
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