The Finance Office of Gulf Coast Medical Group (GCMG), a lar…
The Finance Office of Gulf Coast Medical Group (GCMG), a large, multispecialty physician group affiliated with a regional academic health system, reported $1,432,600 in direct departmental costs in 2024. These overhead costs must be allocated to GCMG’s five patient service departments using the direct method of cost allocation. The finance team has been instructed to evaluate cost allocation using two possible drivers: 1) number of bills submitted and 2) patient service revenue. In 2024, GCMG’s departments submitted 75,980 bills and reported $17,984,220 in total patient service revenues. What is the Finance Office’s allocation rate if the number of bills is used as the cost driver? What is the allocation rate if patient service revenue is used as the cost driver?