Assume that the three patient services departments are adult services, pediatric services, and other services. The patient services revenues and hours of housekeeping services for each department are
Department Revenue Housekeeping Hours
Adult Services $3,000,000 1.500
Pediatric Services $1,500,000 3,000
Other Services $500,000 500
Total $5,000,000 5,000
A) What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver?
B) What is the dollar allocation to each patient services department if hours of housekeeping support are used as the cost driver?
C) What is the difference in the allocation to each department between the two drivers?
D) Which of the two drivers is better? Why?