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XYZ Hospital Housekeeping H/R Gen Admin ICU Care Routine Care Total Revenue - - - 5,000,000 7,000,000 $12,000,000 Direct Costs (1,500,000) (1,000,000) (2,000,000) (2,750,000) (4,000,000)

XYZ Hospital
HousekeepingH/RGen AdminICU CareRoutine CareTotal
Revenue-   -   -   5,000,0007,000,000$12,000,000
Direct Costs(1,500,000)(1,000,000)(2,000,000)(2,750,000)(4,000,000)(11,250,000)
Allocated Costs
Housekeeping-   
Human Resources-   
General Admin-   
Profit/(Loss)(1,500,000)(1,000,000)(2,000,000)2,250,0003,000,000$750,000
House Keeping Labor Hours2505001,00030,00020,00051750
Employees20510152575
Square Feet5001,0002,00010,00020,00033,500

XYZ Hospital does not allocate Support Costs by Dept to Patient Service Depts, and has historically done P&L statement.

Part 1: Use Step Down cost allocation method to allocate Support Dept Costs to Patient Service Depts in order to know profitability of each Patient Service Dept. Allocate costs in this order and by 3 following methods:

1) Housekeeping by Square Feet
2) Human Resources: by Number of Employees
3) General Administration: By Revenue

Complete a dept cost allocation schedule identifying all relevant allocation rates, amounts allocated, cost pools, drivers, etc. and a final Profit and Loss calculation by Patient Service Dept for each of the 3 methods.

Ex:

Cost Pool for:  Housekeeping by SF
DepartmentAllocation Rates$'s Allocated
Housekeeping
H/R
Gen Admin
ICU Care
Routine Care
Total of DriverAllocated Costs$-   
Allocation rate:Costs to Allocate
$0

Part 2: Apply housekeeping labor hours rather than square feet to allocate housekeeping costs for each of the three methods.

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