The Housekeeping Services department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 indirect 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 department sgenerated $5millionin totalrevenues during 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services.
a. What is thevalue of the cost pool?
b. What is the allocation rate if: •patient services revenue is used as the cost driver? •hours of housekeeping services isused as the cost driver?
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