Task:
Assume that $2 mil of Financial Services are related to billing and managerial reporting and $1 mil are related to payroll and personnel management activities.
Q1. Devise and implement a cost allocation scheme that recognizes that Financial Services has two widely different functions?
Q2. Is there any additional information that would be helpful in completing part a?
Q3. What are the costs and benefits to St Mary's of creating two cost pools for Financial Services?
Department Space Housekeeping Salary
Support: (sq ft) Labor hours Dollars
General 10000 2000 1,500,000
Admin
Facilities 20,000 5,000 3,000,000
Financial Services 15,000 3,000 2,000,000
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Total 45,000 10,000 6,500,000
Patient Services:
Routine Care 30,000,000 400,000 150,000 12,000,000
Intensive Care 4,000,000 40,000 30,000 5,000,000
Diagnostic Services 6,000,000 60,000 15,000 6,000,000
Other Services 10,000,000 100,000 25,000 7,000,000
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Total 50,000,000 600,000 220,000 30,000,000
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Grand Total 50,000,000 645,000 230,000 36,500,000