Reference no: EM131078171
St. Benedict's Hospital has three support departments and four patient services departments. The direct costs to each of the support departments are General Administration $2,000,000 Facilities 5,000,000 Financial services 3,000,000 Selected data for the three support and four patient services departments are Patient Services Space Housekeeping Salary Department Revenue (Sq ft) Labor Hours Dollars Support General Administration 10,000 2,000 1,500,000 Facilities 20,000 5,000 3,000,000 Financial services 15,000 3,000 2,000,000 Total 45,000 10,000 6,500,000 Patient Services Routine Care 30,000,000 400,000 150,000 12,000,000 Intensive Care 4,000,000 40,000 30,000 5,000,000 Diagnostic Services 6,000,000 60,000 15,000 6,000,000 Other Services 10,000,000 100,000 25,000 7,000,000 Total 50,000,000 600,000 220,000 30,000,000 Grand Total 50,000,000 645,000 230,000 36,500,000 Now assume that $2 million of Financial services costs are related to billing and managerial reporting and $1million are related to payroll and personnel management activities. a.) Device and implement a cost allocation scheme that recognizes that Financial Services has two widely different functions. b.) What, if any, additional information would be useful in completing Part a? c.) What are the costs and benefits to St. Benedict’s of creating two cost pools for Financial Services?
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