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Part C..

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Subject
Accounting
School
George Mason University
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Homework
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Part C
Yes. There seems to be a variation between the results upon using the various cost drivers since
the allocation rates for the three departments mainly general admin, facilities and financial
services are not the same and they are $68.31, $7.72 and $3.75 respectively. Yes, the allocation
of costs seems to be more reasonable using one cost driver over another, for example the cost of
offering financial services seems to be more correlated to the number of patients registered than
the patient services revenues thus the most efficient cost driver in the three support departments
is the number of patients registered.
My choices of cost drivers would be number of patients registered and the patient service
revenue, this because it is evident from part B-2 that they seem to use less of support services
and thus they have low total overheads costs of $2,500,000 and $3,000,000 respectively for the
hospital as compared to the square feet of space cost driver which has a total overhead cost of
$5,500,000 for the hospital. Yes, I would consider other choices of cost drivers that would
present a better causal relationship between the cost driver (allocation base) and the three
corresponding support departments.

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Part C Yes. There seems to be a variation between the results upon using the various cost drivers since the allocation rates for the three departments mainly general admin, facilities and financial services are not the same and they are $68.31, $7.72 and $3.75 respectively. Yes, the allocation of co ...
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