Nebraska Medicine has three support departments and four patient services depart

Question

Nebraska Medicine has three support departments and four patient services departments. The direct costs to each of the support departments are as follows:

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 shown below:

Assume Nebraska Medicine uses the direct method for cost allocation. The cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. Using the above date, determine the appropriate allocation rates for each support department (round to nearest cent and only enter a number)

a) General Administration =
b) Facilities =
c) Financial Services =

Patient Services Housekeeping Salary Space (sq.ft.) Department Revenue Hours Dollars Support General Admin Facilities Financial Serv 10,000 20,000 15,000 45,000 2,000 5,000 3,000 10,000 $1,500,000 3,000,000 2,000,000 6,500,000 Total Patient Services Routine Care$30,000,000 Intensive Care 4,000,000 Diagnostic Services Other Services 10,000,000 400,000 40,000 60,000 100,000 25,000 600,000 220,000 645,000 150,000 30,000 15,000 $12,000,000 5,000,000 6,000,000 7,000,000 30,000,000 $36,500,000 6,000,000 Total 50,000,000 $50,000,000 Grand Total 230,000

Explanation / Answer

Cost cost driver Allocation rates General Administration 2000000 50000000 0.04 Facilities 5000000 600000 8.33 Financial Services 3000000 50000000 0.06

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