Projected Revenues by Patient Services DepartmentRoutine CareLaboratoryRadiologyAssume that the hospital uses the direct method for cost allocation. Furthermore, the costdriver for general administration and financial services is patient services revenue, while thecost driver for facilities is space utilization.a. What are the appropriate allocation rates?b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to thepatient services departments.Total revenuesProjected Costs for All DepartmentsPatient Services Departments (Direct Costs):Routine CareLaboratoryRadiologyTotal costsSupport Services Departments (Overhead Costs):Financial ServicesFacilitiesHousekeepingGeneral AdministrationHuman ResourcesTotal overhead costsTotal costs of both patient and support servicesProjected profitEXHIBIT 6.7Kensington Hospital: Final AllocationsSupport Department(allocation rate)Financial Services ($0.05556)FacilitiesHousekeepingAdministrationPersonnelDirect costsTotal indirect costsTotal costsRoutine Care($12.64) Xx $16,000,000 =199,800 =76,000 -5.709,000 -($17.58) X($0.432) X($0.250) X 5,709,000 =$ 888,960 x2,525,472 X1,336,0802,466,288 X1,427,250$ 8,644,050$ 5,500,000$14.144.050$16,000,0005,000,0006,000,000$27,000,000$5.500,0003,300,0002,800,000$11,600,000$1,500,0003,800,0001,600,0004,400,0002,550,000$13,850,000$25,450,000$1,550,000Patient Services DepartmentLaboratory$5,000,000 =39,600 =6,000 -2,035,000 -2,035,000 =277,800500,544105.480879,120508,750$2,271,694$ 3,300,000$$5.571,694Total indirect costs = $8,644,050 + $2,271,694 + $2,928,546 = $13,844,290.Total costs - $14,144.050 + $5.571,694 + $5,728,546-$25.444.290.Note: Because of rounding in the allocation process, the totals here differ slightly from the values contained in Exhibit 6.3.Radiologyx $6,000,000 =61,200 =X9,000 -2,439,000 -2,439,000 =$333.360773,568158,2201,053,648609,750$ 2,928,546$ 2,800,000$ 5.728,546

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Description: Projected Revenues by Patient Services DepartmentRoutine CareLaboratoryRadiologyAssume that the hospital uses the direct method for cost allocation. Furthermore, the costdriver for general administration and financial services is patient services re

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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 are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments.

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 are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments.

FINANCIAL ACCOUNTING

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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