Problem: Wellspring Clinic has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The Administration Department of Wellspring Clinic has compiled the following information:
- Department Direct Costs Square Feet No. of Employees
- Housekeeping $ 200,000 3,000 250
- Administration $ 400,000 5,000 500
- Financial Services $ 300,000 2,000 100
- Medicine $1,000,000 53,000 2,600
- Surgery $1,500,000 40,000 2,300
Wellspring has determined that the cost driver for housekeeping is square feet and that the cost driver for Administration and Financial Services is the number of employees. Using the direct method of cost allocation, what is the approximate allocation rate for housekeeping costs (round to the nearest cent)?
- $2.15
- $1.94
- $2.11
- $2.00
- $5.00