Question

Rowley's Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The vice president of finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technology. Can't we have state-of-the-art accounting technology?" (Click the icon to view the budgeted information.) (Click the icon to view additional information.) Read the requirements.

Answer 1

1)	Administration cost			$   20,800.00
	Maintenance			$ 272,000.00
	Sanitation			$ 252,300.00
	Utilities			$ 157,200.00
				$ 702,300.00
	Total Direct Technician Cost			$ 468,200.00
	Rate			$             1.50

Particulars			X-rays	Ultrasound	CT Scan	MRI	Total
Technician Labor		(a)	$   80,000.00	$ 111,000.00	$ 164,000.00	$    113,200.00	$    468,200.00
Depreciation			$   42,240.00	$ 256,000.00	$ 424,960.00	$    876,800.00	$ 1,600,000.00
Materials			$   22,000.00	$   16,200.00	$   23,800.00	$      30,700.00	$      92,700.00
Other costs		(a x 1.5)	$ 120,000.00	$ 166,500.00	$ 246,000.00	$    169,800.00	$    702,300.00
			$ 264,240.00	$ 549,700.00	$ 858,760.00	$ 1,190,500.00	$ 2,863,200.00
No. of procedures			2900	4400	3100	2600
Cost per service			$           91.12	$        124.93	$        277.02	$            457.88

			Costs	Basis		Volume	Cost/ Volume
2)	Administration cost		$   20,800.00	No. of procedures		13000	$             1.60
	Maintenance		$ 272,000.00	Depreciation		1600000	$             0.17
	Sanitation		$ 252,300.00	Cleaning minutes		60	$     4,205.00
	Utilities		$ 157,200.00	Procedure minutes		85	$     1,849.41

Particulars			X-rays	Ultrasound	CT Scan	MRI	Total
Technician Labor			$   80,000.00	$ 111,000.00	$ 164,000.00	$     113,200.00	$     468,200.00
Depreciation			$   42,240.00	$ 256,000.00	$ 424,960.00	$     876,800.00	$ 1,600,000.00
Materials			$   22,000.00	$   16,200.00	$   23,800.00	$       30,700.00	$       92,700.00
Administration			$     4,640.00	$     7,040.00	$     4,960.00	$         4,160.00	$       20,800.00
Maintenance			$     7,180.80	$   43,520.00	$   72,243.20	$     149,056.00	$     272,000.00
Sanitation			$   21,025.00	$   21,025.00	$   63,075.00	$     147,175.00	$     252,300.00
Utilities			$     9,247.06	$   27,741.18	$   46,235.29	$       73,976.47	$     157,200.00
			$ 186,332.86	$ 482,526.18	$ 799,273.49	$ 1,395,067.47	$ 2,863,200.00
No. of procedures			2900	4400	3100	2600
Cost per service			$           64.25	$         109.67	$         257.83	$            536.56