The following data pertain to problems 4.6 through 4.8 St. Benedict's Hospital has three support departments and four patient services ments. The direct costs to each support department are: General Administration Facilities Financial Services $2,00o,ooo 5,000,000 3,000,00o Selected data for the three support and four patient services departments are Patient Services Space Housekeeping Revenue (Square Feet) Labor Hours Salary Dollars Department Support General 2,000 1,500,000 10,000 Administration Facilities Financial Services Total 5,000 3,000 10,000 3,000,000 2,000,000 $6,500,000 20,000 15,000 Patient services Routine Care Intensive Care $12,000,0oo 5,000,000 6,000,000 7,000,000 $30,000,000 $30,000,00o 150,000 400,000o 40,000 60,000 100,000 600,000 30,000 15,000 25,000 220,000 4,000,000o Diagnostic Services 6,00o,000 6,oo Other Services Total 10,000,000 $50,000,00o Grand total $50,000,0oo 645,o00 $36,500,000 230,000 4.6 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 usage a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments.
The following data pertain to problems 4.6 through 4.8 St. Benedict's Hospital has three support departments and four patient services ments. The direct costs to each support department are: General Administration Facilities Financial Services $2,00o,ooo 5,000,000 3,000,00o Selected data for the three support and four patient services departments are Patient Services Space Housekeeping Revenue (Square Feet) Labor Hours Salary Dollars Department Support General 2,000 1,500,000 10,000 Administration Facilities Financial Services Total 5,000 3,000 10,000 3,000,000 2,000,000 $6,500,000 20,000 15,000 Patient services Routine Care Intensive Care $12,000,0oo 5,000,000 6,000,000 7,000,000 $30,000,000 $30,000,00o 150,000 400,000o 40,000 60,000 100,000 600,000 30,000 15,000 25,000 220,000 4,000,000o Diagnostic Services 6,00o,000 6,oo Other Services Total 10,000,000 $50,000,00o Grand total $50,000,0oo 645,o00 $36,500,000 230,000 4.6 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 usage a. What are the appropriate allocation rates? b. Allocate the hospital's overhead costs to the patient services departments.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 5MAD
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Assume that the hospital uses the direct method for cost allocation
Question: how to solve question a & b ?
Transcribed Image Text:The following data pertain to problems 4.6 through 4.8
St. Benedict's Hospital has three support departments and four patient services
ments. The direct costs to each support department are:
General Administration
Facilities
Financial Services
$2,00o,ooo
5,000,000
3,000,00o
Selected data for the three support and four patient services departments are
Patient
Services
Space Housekeeping
Revenue (Square Feet) Labor Hours Salary Dollars
Department
Support
General
2,000 1,500,000
10,000
Administration
Facilities
Financial Services
Total
5,000
3,000
10,000
3,000,000
2,000,000
$6,500,000
20,000
15,000
Patient services
Routine Care
Intensive Care
$12,000,0oo
5,000,000
6,000,000
7,000,000
$30,000,000
$30,000,00o
150,000
400,000o
40,000
60,000
100,000
600,000
30,000
15,000
25,000
220,000
4,000,000o
Diagnostic Services 6,00o,000 6,oo
Other Services
Total
10,000,000
$50,000,00o
Grand total
$50,000,0oo
645,o00
$36,500,000
230,000
4.6 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 usage
a. What are the appropriate allocation rates?
b. Allocate the hospital's overhead costs to the patient services departments.
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