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Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services....

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Accounting

Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows:

Department - Revenue - Housekeeping Hours

Adult Services $3,000,000 - 1,500

Pediatric Services $1,500,000 - 3,000

Other Services $500,000 - 500

Total $5,000,000 - 5,000

a.) What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver?

b.) What is the dollar allocation to each patient services department if hours of housekeeping support are used as the cost driver?

c.) What is the difference in the allocation to each department between the two drivers?

d.) Which of the two drivers is better? Why?

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