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Use the direct method of cost allocation.
Use the direct method of cost allocation.
Assume that $2,000,000 of financial services costs is related to billing and managerial reporting and $1,000,000 is related to payroll and personnel management activities. What is the allocation rate for the Financial Services cost pool allocated based on salary dollars?
General Administration $2,000,000
Facilities $5,000,000
Financial Services $3,000,000
Salary Dollars
General Administration - $ 1,500,000
Facilities - $ 3,000,000
Financial Services - $ 2,000,000
total = 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
Total $ 50,000,000 600,000 220,000 $ 30,000,000
Grand Total $ 50,000,000 645,000 230,000 $ 36,500,000
