Cost Allocation Exercise
cybacatx
week_3.xlsDirect 1
| Cost Allocation Exercise | ||||||
| Use the Direct Method Approach | ||||||
| Projected Revenues by patient services department | Amount | |||||
| Routine care | $ 14,000,000 | |||||
| Laboratory | $ 5,000,000 | |||||
| Radiology | $ 3,500,000 | |||||
| Total Revenues | $ 22,500,000 | |||||
| Projected Costs for all departments: | ||||||
| Patient Services Departments (Direct Cost) | ||||||
| Routine care | $ 3,300,000 | |||||
| Laboratory | $ 3,750,000 | |||||
| Radiology | $ 1,100,000 | |||||
| Total Costs | $ 8,150,000 | |||||
| Support Services Department (Overhead Costs) | ||||||
| Financial Services | $ 1,000,000 | |||||
| Facilities | $ 2,600,000 | |||||
| Housekeeping | $ 1,200,000 | |||||
| Administration | $ 3,000,000 | |||||
| Personnel | $ 1,600,000 | |||||
| Totals Costs | $ 9,400,000 | |||||
| Total Costs of both patient and support services | $ 17,550,000 | |||||
| Projected Profit | $ 4,950,000 |
Direct Cost drivers
| Key Information | ||||||||||
| Cost Drivers | Unit Measure | |||||||||
| Financial Services | Patient Services Revenue | |||||||||
| Facilities | Square Footage | |||||||||
| Housekeeping | Labor Hours | |||||||||
| Administration | Salary Dollars | |||||||||
| Personnel | Salary Dollars | |||||||||
| Patient Services | Square Ft | Housekeeping | Salary Dollars | |||||||
| Revenue | Labor Hours | |||||||||
| Routine care | $ 14,000,000 | 165,000 | 68,000 | $ 4,000,000 | ||||||
| Laboratory | $ 5,000,000 | 30,000 | 3,800 | $ 750,000 | ||||||
| Radiology | $ 3,500,000 | 65,000 | 7,400 | $ 1,056,300 | ||||||
| Total | $ 22,500,000 | 260,000 | 79,200 | $ 5,806,300 | ||||||
| COMPLETE THE TABLE (Need to calculate allocation rate) | ||||||||||
| Overhead Allocation Rates | ||||||||||
| Cost Pool | Cost Driver | Total utilization | Allocation Rate | |||||||
| Financial Services | $ 1,000,000 | Patient Services Revenue | $ 22,500,000 | |||||||
| Facilities | $ 2,600,000 | Square Footage | 260,000 | |||||||
| Housekeeping | $ 1,200,000 | Labor Hours | 79,200 | |||||||
| Administration | $ 3,000,000 | Salary Dollars | $ 5,806,300 | |||||||
| Personnel | $ 1,600,000 | Salary Dollars | $ 5,806,300 |
Final Allocations
| Question 18 | ||||||||||||||
| COMPLETE TABLE (All bolded areas) 3 points | ||||||||||||||
| Patient Services Department | ||||||||||||||
| Support Department | Routine Care | Laboratory | Radiology | |||||||||||
| Financial Services | ||||||||||||||
| Facilities | ||||||||||||||
| Housekeeping | ||||||||||||||
| Administration | ||||||||||||||
| Personnel | ||||||||||||||
| Total Indirect Costs | ||||||||||||||
| Direct cost | ||||||||||||||
| Total cost | ||||||||||||||
| Total indirect cost | ||||||||||||||
| Total cost |
Sheet1
| Data | |
| Variable Cost per Visit | $10.00 |
| Projected Number of Visits | 10000 |
| Total Variable Cost | $100,000 |
| Annual Direct Fixed Cost | $500,000.00 |
| Overhead | $50,000.00 |
| Total Cost | $650,000 |
| Desired Profit | $650,000 |
| Price Needed for Profit | |
| Calculate the price required to achieve desired profit |
