Question

For the below questions, ABC Physical Therapy has gathered the follow information:

ABC Physical Therapy
		Facility One	Facility Two
Facility Sqft		2000	3000
Facility Direct Costs		$        50,000	$          75,000
Admin Costs
Housekeeping			$          30,000
Marketing			$        100,000
Other Admin			$        150,000
Total Admin			$        280,000
Facility Revenue		$     200,000	$        250,000
Facility Total RVUs		24,000	31,250
Facility Encounters		2,400	3,500

1. For housekeeping costs, ABC Physical Therapy has determined that the facility square footage is the appropriate cost driver. What is the allocation rate of housekeeping?
   1. $5.00
   2. $6.00
   3. $4.25
   4. $15.00

Answer 1

Answer: option (b) is correct

Explanation:

Allocation rate of housekeeping = (Total housekeeping expenditure / Total facility square footage)

= ($30,000 / 5,000 sqft)

= $6 per sqft