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DATA INPUT
Cost
Cost Pool Allocation Base Annual Cost
Facilities:
Building depreciation Square feet of space 380,000$
Equipment depreciation
Insurance
Utilities:
Electricity Cubic feet of space 48,000
Waste disposal
Water and sewer
Cable TV and phone
Heat
General adminstration:
Administrator Budgeted number of employees 440,000
Adminstrative staff
Office supplies
Community outreach:
Public education Budgeted dollars of patient billings 80,000
School physical exams
Cost allocation base associated with each division:
Square Cubic Number of Patient
Feet Feet Employees Billings
General Medicine Division 15,000 135,000 30 4,000,000$
Surgical Division 8,000 100,000 20 2,500,000
Medical Support Division 9,000 90,000 20 1,500,000
Administrative Division 8,000 75,000 30 -
Total 40,000 400,000 100 8,000,000$
SOLUTION
1. Table which distributes each of the costs to the hospital's divisions:
Cost Allocation Percentage Costs
Pool Division Base of Total Distributed
Facilities General Medicine Division 15,000 sq. ft. 37.50% 142,500$
Surgical Division 8,000 sq. ft. 20.00% 76,000
Utilities General Medicine Division 135,000 cu. ft. 33.75% 16,200
Surgical Division 100,000 cu. ft. 25.00% 12,000
General General Medicine Division 30 empl. 30.00% 132,000
