1 Facilities has a total cost pool of 1500000 The cost drive

#1. Facilities has a total cost pool of $1,500,000. The cost driver has been determined to square footage. What would the allocation rate be for facilities?

            Choice A:   Not enough information to tell.

            Choice B:   $4.62 per square foot

            Choice C: $8.00 per square foot

            Choice D:   $14,000,000 dollars

#2. Accounting - Billing has a total cost pool of $2,000,000. The cost driver has been determined to number of procedures. What would the allocation rate be for Accounting/Billings?

Choice A:   $1.51 per procedure

            Choice B:   $11.31 per procedure

            Choice C: $9.32 per procedure

            Choice D:   $75,000,000 dollars

#3. Now that you have calculated the allocation rate for facilities. What is the amount of facilities related expense that you would allocate to the Routine Care Department?

Choice A:   $1,500,000

            Choice B:   $24,000,000

            Choice C: $693,000

            Choice D:   $25,000

#4. Now that you have calculated the allocation rate for Accounting/Billing. What is the amount of Accounting/Billing’s related expense that you would allocate to the Routine Care Department?

Choice A:   $540,000

            Choice B:   $630,000

            Choice C: $755,000

            Choice D:   $875,000

Department Facilities (support dept) Accounting - Billing (su Total for Support Revenues Expenses Space (square Feet) Number of Procedure S 1,500,000 2,000,000 S 3,500,000 10,000 20,000 30,000 tments Routine Care (patient services) Intensive Care (patient services) Diagnostic Servi Total for Patient Service Gr\'ant lotal $30.000,000 $ 10,000,000 $25,000,000 $8.000,000 $20,000,000 6,000,000 S75,000,000 S24,000,000 S75,000,000 S 27.500,000 150.000 100.000 75,000 325,000 355,000 500,000 450,000 375,000 1,325,000 1.325.000 ces (patient services tments

Solution

#1. Facilities has a total cost pool of $1,500,000. The cost driver has been determined to square footage. What would the allocation rate be for facilities?

Choice B:   $4.62 per square foot

=1500,000/(355000-30000)

=$4.62

#2. Accounting - Billing has a total cost pool of $2,000,000. The cost driver has been determined to number of procedures. What would the allocation rate be for Accounting/Billings?

Choice A:   $1.51 per procedure

$2,000,000/1325000=$1.51 per procedure

Now that you have calculated the allocation rate for facilities. What is the amount of facilities related expense that you would allocate to the Routine Care Department?

Choice C: $693,000

=4.62*150000=$693,000

#4. Now that you have calculated the allocation rate for Accounting/Billing. What is the amount of Accounting/Billing’s related expense that you would allocate to the Routine Care Department?

Choice C: $755,000

=1.51*500000

=755000