The following data pertain to problems 63 through 66 St Bene

The following data pertain to problems 6.3 through 6.6: St. Benedict\'s Hospital has three support departments and four patient departments. The direct costs to each of the support departments are as Se General Administration Facilities Financial Services $2,000,000 5,000,000 3,000,000 Selected data for the three support and four patient services departments shown below are Patient Services (square Housekeeping Salary Revenue fect) Labor Hours Dollars Space Department Support: General 10,000 2,000 1,500,000 Administration Facilities Financial Services 5,000 3,000 45,00010,000 20,000 15,000 ,00 3,000,000 2,000,000 S 6,500,000 Total Patient Services Routine Care $30,000,000 400,000 150,000 $12,000,000 5,000,000 6,000,000 7,000,000 Intensive Care 4,000,000 40,000 30,000 Diagnostic Services 6,000,000 60,000 15,000 Other Services 10,000,000 100,000 25,000 Total Grand Total $50,000,000 600,000 220,000 $30,000,000 $50,000,000 645,000230,000$36,500,000

Solution

6.3) A.) Compute appropriate allocation rates Overhead Cost Cost driver Driver units Appropriate allocations rates General administration cost $2,000,000 Patient revenue service 50,000,000 $0.04 Financial service cost $5,000,000 Patient revenue service 50,000,000 0.1 Facilities service cost $3,000,000 Square feet 600,000 $5 Total $10,000,000 B) Support department Routine care Intensive care Diagnostic service Other services Total Revenue $30,000,000 $4,000,000 $6,000,000 $10,000,000 $50,000,000 Space used $400,000 $40,000 $60,000 $100,000 $600,000 General admission cost $0.04 x Reveue $1,200,000 $160,000 $240,000 $400,000 $2,000,000 Financial service cost $3,000,000 $400,000 $600,000 $1,000,000 $5,000,000 Facilities service cost $2,000,000 $200,000 $300,000 $500,000 $3,000,000 Total overhead allocated $6,200,000 $760,000 $1,140,000 $1,900,000 $10,000,000