Columbus Clinical Services (a multispecialty group practice) has three support departments, Administration, Housekeeping and Finance, and...
Columbus Clinical
Services (a multispecialty group practice) has three support
departments, Administration, Housekeeping and Finance, and three
patient services departments, Medicine, Surgery and Pharmacy.
Administration provides the most services to other departments
followed by Housekeeping and then Finance. The results of a
step-down cost allocation for Cherry Community Hospital are
presented below:
Administration Costs Allocated to:
Housekeeping $2,000
Finance $1,000
Medicine $4,000
Surgery $5,000
Pharmacy $2,000
Housekeeping Costs Allocated to:
Finance $1,000
Medicine $4,500
Surgery $8,000
Pharmacy $2,500
Finance Costs Allocated to:
Medicine $7,000
Surgery $9,000
Pharmacy $3,000
Given the information above, what were total direct costs (the
original cost pool) for the Finance Department?
| a. |
$21,000 |
|
| b. |
$17,000 |
|
| c. |
$19,000 |
|
| d. |
$14,000 |
|
| e. |
$16,000 |
Homework Answers
From the given information,
Total Finance cost allocated= Medicine+Surgery+Pharmacy
= $7000+9000+3000= $19000
As the finance department allocated costs also includes the allocation cost of Administration department and housekeeping department,
The total direct costs (the original cost pool) for the Finance Department= Total finance cost allocated-Allocated cost of administration department-Allocated cost of housekeeping department
= $19000-1000-1000
= $17000
So, the answer is option B) $17000
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Columbus Clinical
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