Determine the new costs for inpatient and outpatient

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Reference no: EM132215396

Question - The All Souls Hospital has three service departments (Nursing Support, Maintenance and Administration) and two operating departments (Inpatient and Outpatient.) Selected data from a recent period on the five departments follows.

	Service Departments			Operating Departments		Total
	Nursing Support	Maintenance	Administration	Inpatient	Outpatient	Total
Direct Costs	$140,000	$105,000	$48,000	$275,000	$430,000	$998,000
Number of Employees	60	35	140	315	210	760
Square Feet of Space Occupied	15,000	10,000	20,000	40,000	100,000	185,000
Patient Hours				30,000	60,000	90,000

Hospital Administrators use the following for cost allocation:

Allocates Nursing Support based upon Number of Employees.
Allocates Maintenance based upon Square Feet of Space Occupied.
Allocates Administration based upon Patient Hours.

Complete the following -

1. Use the step method to allocate the service department costs to the operating departments based upon the information above and determine the new costs for Inpatient and Outpatient. Use the following order: Nursing Support, Maintenance, Administration.

2. Use the direct method to allocate the service department costs to the operating departments.

Reference no: EM132215396

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