Allocation Rate Calculation at Wellspring Clinic

What is the cost driver for housekeeping at Wellspring Clinic?

A. Square feet

B. Number of employees

C. Number of patients

D. Revenue generated

The cost driver for housekeeping at Wellspring Clinic is:

A. Square feet

In the case of Wellspring Clinic, the cost driver for housekeeping is square feet. This means that the allocation of housekeeping costs is based on the amount of space that needs cleaning and maintenance. By determining square feet as the cost driver, the Clinic can allocate costs more accurately and efficiently.

When using the step-down method of cost allocation, the approximate allocation rate for housekeeping costs is calculated by dividing the total housekeeping costs by the total square feet. In this case, the approximate allocation rate for housekeeping costs at Wellspring Clinic is $2.11, rounded to the nearest cent.

By understanding the cost driver and allocation rate for housekeeping costs, Wellspring Clinic can better manage its resources and ensure that each department receives the appropriate amount of funding for their operations.