Rate for general administration and financial services

Assignment Help Financial Management

Reference no: EM13808328

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 as follows:

Patient Space

Services (Square Housekeeping Salary

Department Revenue Feet) Labor Hours Dollars

Support:

General 10,000 2,000 $1,500,000

Administration

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

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 utilization.

a. what is the allocation rate for General Administration and Financial Services

b. how much overhead for General Administration and Financial Services is allocated to Intensive Care?

Reference no: EM13808328

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