Chapter 4 Healthcare

Chapter 4 Healthcare - Chapter 4 4.6 A. What are the...

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Chapter 4 4.6 A. What are the appropriate allocation rates ? The allocation rate is calculated as Amount/Base Where Base is the value in the patient service department General Administration Allocation rate = Amount/Patient Service revenue = $2,000,000 / $50,000,000 = $0.04 per dollar of patient services revenue. Facilities Allocation rate = Amount/Space = $5,000,000 / 600,000 = $8.33 per square foot. Financial Services Allocation rate = Amount/Patient Service Revenue = $3,000,000 / $50,000,000 = $0.06 per dollar of patient services revenue. B. Allocate the hospital overhead costs to the patient’s services department. Patient Service Departments Support Routine Intensive Diagnostic Other Department Care Care Services Services Total General Admin ($0.04 X patient revenue) 1,200,00 0 160,00 0 240,00 0 400,00 0 2,000,00 0 Facilities ($8.33 X space occupied) 3,333,333 333,33 3 500,00 0 833,33 3 5,000,00 0 Financial ($0.06 X patient revenue) 1,800,00 0 240,00 0 360,00 0 600,00 0 3,000,00 0 Total Indirect Costs 6,333,33
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This document was uploaded on 07/24/2011.

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Chapter 4 Healthcare - Chapter 4 4.6 A. What are the...

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