The Housekeeping Services department of Ruger Clinic, a multispecialty practice in Toledo, Ohio,… 1 answer below »

The Housekeeping Services department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs during 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5 million in total revenues during 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services.

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a. What is the value of the cost pool?

b. What is the allocation rate if:

• patient services revenue is used as the cost driver?

• hours of housekeeping services is used as the cost driver?