6.1 The housekeeping services department of Ruger Clinic, amultispecialty practice in Toledo, Ohio, had $100,000 in directcosts during 2015. These costs must be allocated to Ruger's threerevenue-producing patient services departments using the directmethod. Two cost drivers are under consideration: patient servicesrevenue and hours of housekeeping services used. The patient servicesdepartments generated $5 million in total revenues during 2015,and to support these clinical activities, they used 5,000 hours ofhousekeeping services.a. What is the value of the cost pool?b. What is the allocation rate if••patient services revenue is used as the cost driver?hours of housekeeping services is used as the cost driver?

The objective of the question is to calculate the value of the cost pool and the allocation rate…

Answered: 6.1 The housekeeping services…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Housekeeping Services department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5 million in total revenues during 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if: • patient services revenue is used as the cost driver? • hours of housekeeping services is used as the cost driver?
The housekeeping services department of Ruger Clinic, a multispecialty practice had $100,000 in direct costs this year. The patient services department generated $5,000,000 in patient revenue and the departments used a total of 5,000 total hours of housekeeping.The adult services department generated $3 million in patient revenue and used 1,500 housekeeping hours what is dollar allocation if patient services is used as the cost driver
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