Chapter 4. Question 4.4. A. What is the cost pool? B. What...
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Finance
Chapter 4. Question 4.4.
A. What is the cost pool?
B. What is the allocation rate using (1) patient services revenue (2) using hours of housekeeping?
My solutions:
A: $100,000
B: (1)$0.02 (2)$20
4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during the year. These costs must be allocated to Ruger's three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated a total of $5 million in revenues during the year. To support these clinical activities, the departments used 5,000 total hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if (1) patient services revenue is used as the cost driver and if ( 2 ) hours of housekeeping services are used as the cost driver
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