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Wellspring Clinic has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The
Wellspring Clinic has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The Administration Department of Wellspring Clinic has compiled the following information:
Wellspring has determined that the cost driver for housekeeping is square feet and that the cost driver for Administration and Financial Services is the number of employees. Using the direct method of cost allocation, what is the approximate allocation rate for housekeeping costs (round to the nearest cent)?
Department | Direct Costs | Square Feet | No. of Employees |
Housekeeping | $ 200,000 | 3,000 | 250 |
Administration | $ 400,000 | 5,000 | 500 |
Financial Services | $ 300,000 | 2,000 | 100 |
Medicine | $1,000,000 | 53,000 | 2,600 |
Surgery | $1,500,000 | 40,000 | 2,300 |
$2.15 |
$1.94 |
$2.11 |
$2.00 |
$5.00 |
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