Use the information below to calculate using the STEP-DOWN METHOD. In this example, it has been determined to step-down Facilities expenses to the rest of the support departments and to the direct or patient service areas.

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

Choice A: $4.35 per square foot

Choice B: $5.51 per square foot

Choice C: $4.62 per square foot

Choice D: $75,000,000 dollars

How much would Facilities expense be allocated to the Accounting/Billing Department?

Choice A: Nothing it is an indirect department

Choice B: $75,000

Choice C: $87,000

Choice D: $92,000

After the allocation of Facilities to the Accounting/Billing department what would be the new cost pool for the Accounting / Billing Department?

Choice A: $2,087,000

Choice B: $3,000,0000

Choice C: $5,000,000

Choice D: $100,000,000,000

Accounting - Billing has a total cost pool of $2,087,000. The cost driver has been determined to number of procedures. What would the allocation rate be for Accounting/Billings?

Choice A: $11.31 per procedure

Choice B: $1.58 per procedure

Choice C: $3.32 per procedure

Choice D: $8.00 per procedure

Now that you have calculated the new 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: $790,000

Choice B: $650,000

Choice C: $755,000

Choice D: $975,000

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: $712,750

Choice B: $1,593,000

Choice C: $11,442,500

Choice D: $6,919,780

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