Use the following information to answer the questions USING DIRECT METHOD:

#1. Facilities has a total cost pool of $1,500,000. The cost driver has been determined to square footage. What would the allocation rate be for facilities?

Choice A: Not enough information to tell.

Choice B: $4.62 per square foot

Choice C: $8.00 per square foot

Choice D: $14,000,000 dollars

#2. Accounting - Billing has a total cost pool of $2,000,000. The cost driver has been determined to number of procedures. What would the allocation rate be for Accounting/Billings?

Choice A: $1.51 per procedure

Choice B: $11.31 per procedure

Choice C: $9.32 per procedure

Choice D: $75,000,000 dollars

#3. Now that you have calculated the allocation rate for facilities. What is the amount of facilities related expense that you would allocate to the Routine Care Department?

Choice A: $1,500,000

Choice B: $24,000,000

Choice C: $693,000

Choice D: $25,000

#4. Now that you have calculated the allocation rate for Accounting/Billing. What is the amount of Accounting/Billings related expense that you would allocate to the Routine Care Department?

Choice A: $540,000

Choice B: $630,000

Choice C: $755,000

Choice D: $875,000

#5. What would be the total expense for the Routine Care department (this is the addition of direct department expenses and allocated indirect costs).

Choice A: $912,750

Choice B: $1,448,000

Choice C: $3,750,000

Choice D: $11,448,000

#6. What do you notice about the allocation of the indirect expenses when this is done properly?

Choice A: The total allocated amount is the same as the beginning indirect total (within a range of less than 1%)

Choice B: The amount allocated will always be substantially (>10%) greater than the beginning Amount

Choice C: The amount allocated will always be substantially (

Choice D: Not enough information to tell

Revenues Department Facilities (support dept) Accounting - Billing (support dept) Total for Support Departments Expenses $ 1,500,000 2,000,000 $ 3,500,000 Space (square Feet) Number of Procedu 10,000 20,000 30.000 Routine Care (patient services) Intensive Care (patient services) Diagnostic Services (patient services) Total for Patient Service Departments Grant Total $ $ $ $ 30,000,000 25,000,000 20,000,000 75,000,000 75,000,000 $ $ $ $ $ 10,000,000 8,000,000 6,000,000 24.000.000 27,500,000 150,000 100,000 75,000 325,000 355,000 500,000 450,000 375.000 1.325.000 1,325,000