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Department		Direct Costs		Space (Square Feet)		Housekeeping Labor Hours		Salary Dollars
Support:
General Admin		$4,000,000		8,000		3,000		$2,000,000
Facilities		6,000,000		25,000		6,000		4,000,000
Financial Services		3,000,000		10,000		4,000		2,500,000
Total		$13,000,000		43,000		13,000		$8,500,000
Patient Services:		Patient Services Revenue
Routine Care		$40,000,000		400,000		150,000		$12,000,000
Intensive Care		5,000,000		40,000		30,000		5,000,000
Diagnostic Services		8,000,000		60,000		15,000		6,000,000
Other Services		12,000,000		100,000		25,000		7,000,000
Total		$65,000,000		600,000		220,000		$30,000,000
Grand Total		$65,000,000		643,000		233,000		$38,500,000

6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospitals overhead costs to the patient services departments.

6.4 Assume that the hospital uses salary dollars as the cost driver for general administration, housekeeping labor hours as the cost driver for facilities, and patient services revenue as the cost driver for financial services. (The majority of the costs of the facilities department stem from the provision of housekeeping services.) a. What are the appropriate allocation rates? b. Use an allocation table similar to the one used for Problem 6.3 to allocate the hospitals overhead costs to the patient services departments. c. Compare the dollar allocations with those obtained in Problem 6.3. Explain the differences. d. Which of the two cost driver schemes is better? Explain your answer

please dont post the answer as a picture so i can add and change the calculations if necessarily

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