Using reciprocal allocation of service department costs for decision making

This article has provided a look into the use of the reciprocal method as an alternative to more conventional methods of hospital service department cost allocation methods. The reciprocal method can be used with readily available software and with data that are largely already known. This method will provide not only appropriate allocation values for financial reporting but data that can be used for hospital decision making. In the highly competitive and sometimes hostile environment in which hospitals now fight to survive, any additional relevant data--especially that generated at almost no additional cost--should be provided to managers to help in the decision-making process.