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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?
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