Assume that the three patient services departments are adult services revenue and hours of housekeeping services for each department are:
|
Department
|
Revenue
|
Housekeeping
|
|
Adult services
|
$3,000,000
|
1,500
|
|
Pediatric services
|
1,500,000
|
3,000
|
|
Other services
|
500,000
|
500
|
|
|
|
|
|
Total
|
$5,000,000
|
5,000
|
a. What is the dollar allocation to each patient service department if patient services revenue is used as the cost driver?
b. What is the dollar allocation to each patient services if hours of house keeping support are used as the cost driver?
c. What is the difference in the allocation to each department between the two drivers?
d. Which of the two divers is better? Why?