11. Accounting-Billing has a total cost pool of $2,087,000. The cost driver has

Question

11. Accounting-Billing has a total cost pool of $2,087,000. The cost driver has been determined to number of procedures. What would the allocation rate be for Accounting/Billings? Choice A: $11.31 per procedure Choice B: $1.58 per procedure Choice C: $3.32 per procedure Choice D: $8.00 per procedure #12. Now that you have calculated the new allocation rate for Accounting/Billing, what is the amount of Accounting/Billing's related expense that you would allocate to the Routine Care Department? Choice A: $790,000 Choice B: $650,000 Ch oice C: $755,000 Choice D $975,000

Explanation / Answer

11. Answer: Choice B: $1.58 per procedure

Allocation rate for Accounting/Billings = Total cost/Total cost driver = $2087000/1325000 = $1.58

12. Answer: Choice A: $790000

Cost allocated to Routine Care Department = Allocation rate x Cost driver usage = $1.58 x 500000 procedures = $790000

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