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a. b. c. Wnat is the nospitat's undeying Cost Structure! What are the hospital's expected total costs? What are the hospital's estimated total costs at 12,50o inpatient days? At 17.500 inpatient days? What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa- d. tient days? 4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during the year. 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 rev- enue and hours of housekeeping services used. The patient services departments generated a total of $5 million in revenues during the year. To support these clinical activities, the departments used 5,ooo total hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if (1) patient services revenue is used as the cost driver and if (2) hours of housekeeping services are used as the cost driver? 4.5 Refer to problem 4.4. Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows: Housekeeping Hours Revenue Department

a. b. c. Wnat is the nospitat's undeying Cost Structure! What are the hospital's expected total costs? What are the hospital's estimated total costs at 12,50o inpatient days? At 17.500 inpatient days? What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa- d. tient days? 4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during the year. 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 rev- enue and hours of housekeeping services used. The patient services departments generated a total of $5 million in revenues during the year. To support these clinical activities, the departments used 5,ooo total hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if (1) patient services revenue is used as the cost driver and if (2) hours of housekeeping services are used as the cost driver? 4.5 Refer to problem 4.4. Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows: Housekeeping Hours Revenue Department

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 3MTC
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What is the value of the cost pool and allocation rate if patient service is used as cost driver and hours of housekeeping used as a cost driver?

$100,000 in direct costs, $5 million in patient service revenues, & 5,000 hrs of housekeeping

a. b. c. Wnat is the nospitat's undeying Cost Structure! What are the hospital's expected total costs? What are the hospital's estimated total costs at 12,50o inpatient days? At 17.500 inpatient days? What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa- d. tient days? 4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during the year. 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 rev- enue and hours of housekeeping services used. The patient services departments generated a total of $5 million in revenues during the year. To support these clinical activities, the departments used 5,ooo total hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if (1) patient services revenue is used as the cost driver and if (2) hours of housekeeping services are used as the cost driver? 4.5 Refer to problem 4.4. Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows: Housekeeping Hours Revenue Department
Transcribed Image Text:a. b. c. Wnat is the nospitat's undeying Cost Structure! What are the hospital's expected total costs? What are the hospital's estimated total costs at 12,50o inpatient days? At 17.500 inpatient days? What is the average cost per inpatient day at 12,500, 15,000, and 17,500 inpa- d. tient days? 4.4 The Housekeeping Services Department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during the year. 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 rev- enue and hours of housekeeping services used. The patient services departments generated a total of $5 million in revenues during the year. To support these clinical activities, the departments used 5,ooo total hours of housekeeping services. a. What is the value of the cost pool? b. What is the allocation rate if (1) patient services revenue is used as the cost driver and if (2) hours of housekeeping services are used as the cost driver? 4.5 Refer to problem 4.4. Assume that the three patient services departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows: Housekeeping Hours Revenue Department
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