Yellville Regional Hospital is a small hospital with two service departments and three revenue areas:Service DepartmentDirect Costs Square Feet Laundry Pounds Housekeeping (HK)$80,000 - 16,000 Laundry$132,000 500 Revenue Areas: Surgery$400,000 1,500 48,000 Semiprivate rooms$200,000 2,000 24,000 Maternity$150,000 1,000 12,000 The hospital wants to allocate the service department costs to the revenue areas. Housekeeping is allocated based on square footage; Laundry is allocated based on pounds of laundry. The normal capacity for Surgery is 200 hours per month; normal capacity for semiprivate rooms is 600 patient days; and normal capacity for maternity is 200 patient days.Required:Determine the overhead rate for the three revenue areas. Allocate the service
department costs to the revenue areas using the direct method.
What will be an ideal response?
Surgery: $2,510.48/hr; Semiprivate rooms: $455.45/day; Maternity: $933.18/day.
Surgery: $502,096/200 hrs = $2,510.48/hr.
Semiprivate Rooms: $273,269/600 patient days = $455.45/day.
Maternity: $186,635/200 patient days = $933.18/day.
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