The new administrator for the Sault Area Hospital surgical clinic, wants to allocate utilities based on square footage of each department, to allocate administration based on direct costs, and to allocate lab costs based on tests. How would the indirect costs be distributed?

Exhibit 12-12 Basic statistics for cost allocation in a surgery clinic A Square Feet Dept. Costs $300,000 Lab Tests Utiities 3,000 4,000 5,000 2,000 Administration S700,000 S800,000 $1,800,000 Laboratory Day Op suite Cystoscopy Endoscopy Total 6,000 2,500 16,500 S600,000 S650,000 $4,850,000 2,000 2,000 10,000