Question

You are considering expanding the hospital you direct in order to increase room for routine care services. In order to expand, you have decided to move the orthopedics department elsewhere, freeing up space for the routine care department to expand. Needing to find a new place for orthopedics, you decide to keep the department on the same campus as the hospital in case inpatient care was needed. The decision is to build a new building on vacant land on the campus. Understanding multiple cost allocation methods exist, what are important factors to take into consideration when evaluating which method, Revenue Method or Square Footage Method, should be used?

Answer 1

The times-revenue method is a valuation method used to determine the maximum value of a company. The times-revenue method uses a multiple of current revenues to determine the "ceiling" (or maximum value) for a particular business.

Square Footage Method -It is defined as the area of a square with sides of 1 foot.

Anyone searching for an apartment, buying a house, or preparing to acquire office space must get very used to this form of measurement.

The decision is to build a new building on vacant land on the campus. in this decesion square footage method should used for evaluation . here hospital not calculating revenue , so revenue method should not use. here the aim is increase room for routine care services , build a new building on vacant land on the campus so square footage method should used.