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 salary dollars?

General Administration $2,000,000

Facilities $5,000,000

Financial Services $3,000,000

Salary Dollars

General Administration - $ 1,500,000

Facilities - $ 3,000,000

Financial Services - $ 2,000,000

total = 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