Assume that three patient service departments are Adult Services, Pediatric Services, and Other Services. The patient services revenue and hours of housekeeping services for each department are as follows:
Department Revenue Housekeeping Hours
Adult Services $3,000,000 1,500
Pediatric Services 1,5000,000 3,000
Other Services 500,000 500
Total $5,000,000 5,000
What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver?
What is the dollar allocation to each patient services department if hours of housekeeping support are used as the cost driver?
Which of the two drivers is better? Why?