Reference no: EM132757932

Wellspring Clinic has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments.

The Administration Department of Wellspring Clinic has compiled the following information:

Department           Direct Costs           Square Feet          No. of Employees

Housekeeping           $ 200,000              3,000                         250

Administration           $ 400,000              5,000                            500

Financial Services         $ 300,000              2,000                            100

Medicine                         $1,000,000          53,000                      2,600

Surgery                          $1,500,000             40,000                     2,300

Problem 1: Wellspring has determined that the cost driver for housekeeping is square feet and that the cost driver for Administration and Financial Services is the number of employees. Using the direct method of cost allocation, what is the approximate allocation rate for housekeeping costs (round to the nearest cent)?

A. $2.15
B. $1.94
C. $2.11
D. $2.00
E. $5.00