a.b.c.Wnat is the nospitat's undeying Cost Structure!What are the hospital's expected total costs?What are the hospital's estimated total costs at 12,50o inpatient days? At17.500 inpatient days?What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa-d.tient days?4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practicein Toledo, Ohio, had $100,000 in direct costs during the year. These costs must beallocated to Ruger's three revenue-producing patient services departments usingthe direct method. Two cost drivers are under consideration: patient services rev-enue and hours of housekeeping services used. The patient services departmentsgenerated a total of $5 million in revenues during the year. To support these clinicalactivities, the departments used 5,ooo 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 costdriver and if (2) hours of housekeeping services are used as the cost driver?4.5 Refer to problem 4.4. Assume that the three patient services departments are AdultServices, Pediatric Services, and Other Services. The patient services revenue andhours of housekeeping services for each department are as follows:Housekeeping HoursRevenueDepartment

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Asked May 9, 2019
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What is the value of the cost pool and allocation rate if patient service is used as cost driver and hours of housekeeping used as a cost driver?

$100,000 in direct costs, $5 million in patient service revenues, & 5,000 hrs of housekeeping

a.
b.
c.
Wnat is the nospitat's undeying Cost Structure!
What are the hospital's expected total costs?
What are the hospital's estimated total costs at 12,50o inpatient days? At
17.500 inpatient days?
What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa-
d.
tient days?
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 rev-
enue 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,ooo 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?
4.5 Refer to problem 4.4. 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:
Housekeeping Hours
Revenue
Department
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a. b. c. Wnat is the nospitat's undeying Cost Structure! What are the hospital's expected total costs? What are the hospital's estimated total costs at 12,50o inpatient days? At 17.500 inpatient days? What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa- d. tient days? 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 rev- enue 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,ooo 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? 4.5 Refer to problem 4.4. 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: Housekeeping Hours Revenue Department

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Expert Answer

Step 1

a ) What is the Value of Cost Pool?

The Value Cost pool is 1, 00,000

Step 2
  1. B) What is the allocation rate if:-

(1) Patient services revenue is used at the cost driver.

Answer:-

Calculation of the above will be as below

 Allocation Rate = Cost / Patient service revenue.

Where, Cost is1, 00,000 and Patient service revenue is $ 5 million = 500000, so it will be,

 Allocation Rate = 100,000 / 5,000,000

Allocation Rate = 0.02 per patient service revenue

Step 3
  1. b) Hours of housekeeping services is used as the cost driver?

Calculation of the above:-

Allocation Rate = Cost / Book keeping service

Where, Cost is 1, 00,00...

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