Question

Riddick'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?" EEB (Click the icon to view the budgeted information.) EEB (Click the icon to view additional information.) Read the requirements Requirement 1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRI using direct technician labor costs as the allocation basis Start by calculating the budgeted overhead rate for total indirect costs based on total labor. First select the formula, theen enter the applicable amounts and calculate the rate. (Round your answer to two decimal places, X.XX. Abbreviations used: DC Direct cost, DL Direct labor, $ dollar.) Total indirect costs Total technician labor cost / Budgeted overhead rate 448,320 $ 672,480 1.50 per DL $ Now calculate the total budgeted costs for each service and the budgeted cost per each service using direct technician labor costs as the allocation basis. (Round the budgeted cost per service to the nearest cent.) Х-rays 73500 Technician labor 6300 Depreciation 21900 Materials Indirect costs Total budgeted costs Budgeted cost per service

Answer 1

Book1 - Microsoft Excel - X Home Insert Page Layout Formulas Data Review View * Cut Copy - General Wrap Text 3 Merge & Center 1 1 - 3 Autosum * Calibri 11 - A A BIU - DA Font - % 8.09 Paste Format Painter Clipboard Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells A1 A F G H J K - Total Overhead Cost Administration Maintenance Sanitation Utilities Total Overhead Cost=(A) Technical Labor cost=(B) Overhead Rate=Overhead cost/Activity base Overhead Rate=(A)/(B) $ $ $ $ $ $ 22,560.00 2,40,000.00 2,63,670.00 1,46,250.00 6,72,480.00 4,48,320.00 1.5 Per direct labor cost 1. Per une Calculation budgeted cost per service using Direct Technician labor cost as activity base X-Ray Ultrasound CT-Scan MRI Total Technician Labor $ 73,500.00 $ 1,13,100.00 $ 1,60,720.00 $ 1,01,000.00 $ Depreciation $ 6,300.00 $ 2,76,500.00 $ 4,66,200.00 $ 8,51,000.00 $ Materials $ 21,900.00 $ 16,800.00 $ 24,500.00 $ 31,000.00 $ Allocated Overhead $ 1,10,250.00 $ 1,69,650.00 $ 2,41,080.00 $ 1,51,500.00 $ Total Budgeted cost=(A) $ 2,11,950.00 $ 5,76,050.00 $ 8,92,500.00 $11,34,500.00 $ Budgeted number of procedure=(B) 5280 3780 3290 2695 Budgeted cost per service=(A)/(B) 40.14 $ 152.39 $ 271.28 $ 420.96 4,48,320.00 16,00,000.00 94,200.00 6,72,480.00 28,15,000.00 Allocated Overhead 39 40 ► Ready X-Ray ($73500*$1.5) Ultrasound ($113100*$1.5) CT-Scan ($160720*$1.5) MRI Total ($101000*$1.5) ($448300*$1.5) Technical Labor cost*Overhead rate Sheet1 Sheet2 Sheet3 Average: 182626.6768 Count: 367 Sum: 40908375.6 B O 100% . OENG g A 23:22 03-11-2019 0

Book1 - Microsoft Excel - X Home Insert Page Layout Formulas Data Review View * Cut Copy - General Wrap Text 3 Merge & Center 1 1 - 3 Autosum * Calibri 11 - A A BIU - DA Font Paste Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Format Painter Clipboard 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells foc A1 ГДА B E F G H I J K L Allocated Overhead X-Ray ($73500*$1.5) Ultrasound ($113100*$1.5) CT-Scan ($160720*$1.5) MRI Total ($101000*$1.5) ($448300*$1.5) Technical Labor cost*Overhead rate 39 40 41 42 43 44|2) Calculation budgeted cost per service using Activity based costing X-Ray MRI Total Ultrasound CT-Scan Total Procedure Minutes 5280 3780 3290 15045 Number of Procedure=(A) Minutes for each procedure=(B) Total Procedure Minutes=(A)*(B) 2695 50 134750 52800 56700 822501 121750 326500 Total Cleaning Minutes 3780 5280 3290 2695 15045 Number of Procedure=(A) Minutes to clean after each procedure=(B) Total Cleaning Minutes=(A)*(B) 26400 18900 49350 80850 175500 Activity Administration Maintenance Sanitation Activity Based costing (A) Budgeted cost Cost driver $ 22,560.00 Total number of procedure $ 2,40,000.00 Total Dollars of Depreciation $ 2,63,670.00 Total cleaning minutes c 116 250 nn Totalnrocadura minut (B) (A)/(B) Units of cost driver Activity Rate 15045 $ 1.49950 Per procedure 1600000 $ 0.15000 Per dollars of depreciation 175500 $ 1.50239 Per cleaning minute 22650 c 0 11701 Dornranduro minuta 60 61 I 1+iltins S heet1 Sheet2 Sheet3 0 RE Ready Average: 182626.6768 Count: 367 Sum: 40908375.6 B O 100% g A OENG 23:22 03-11-2019 0

Book1 - Microsoft Excel - X Home Insert Page Layout Formulas Data Review View * Cut Copy - General Wrap Text 3 Merge & Center 1 1 - 3 Autosum * Calibri 11 - A A BIU - DA Font Paste Format Painter Clipboard Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells A1 A 2 в E F G H I J K L Activity Administration Maintenance Sanitation Utilties D Activity Based costing (A) Budgeted cost Cost driver $ 22,560.00 Total number of procedure $ 2,40,000.00 Total Dollars of Depreciation $ 2,63,670.00 Total cleaning minutes $ 1,46,250.00 Total procedure minutes (B) (A)/(B) Units of cost driver Activity Rate 15045 $ 1.49950 Per procedure 1600000 $ 0.15000 Per dollars of depreciation 175500 $ 1.50239 Per cleaning minute 326500 $ 0.44793 Per procedure minute TE Total X-Ray $ Ultrasound 73,500.00 $ 6,300.00 $ 21,900.00 $ CT-Scan MRI 1,13,100.00 $ 1,60,720.00 $ 1,01,000.00 $ 2,76,500.00 $ 4,66,200.00 $ 8,51,000.00 $ 16,800.00 $ 24,500.00 $ 31,000.00 $ S 4,48,320.00 16,00,000.00 94,200.00 Technician Labor Depreciation Materials Allocated Overhead Administration Maintenance Sanitation Utilties Total Budgeted cost Budgeted number of procedure Budgeted cost per service $ $ 7,917.37 $ 945.00 $ 39,663.18 $ 23,650.842 $ 1,73,876.39 $ 5280 32.93 $ 5,668.12 $ 41,475.00 $ 28,395.23 $ 25,397.779 $ 5,07,336.13 $ 3780 134.22 $ 4,933.36 $ 4,041.16 $ 69,930.00 $ 1,27,650.00 $ 74,143.10 $ 1,21,468.49 $ 36,842.458 $ 60,358.920 $ 8,37,268.92 $ 12,96,518.56 $ 32900 2695 254.49 $ 481.08 22,560.00 2,40,000.00 2,63,670.00 1,46,250.000 28,15,000.00 $ Administration 79 Y.RO Tiltracound CT.Sran Mo ARI Total | Sheet1 Sheet2 Sheet3 ► Ready Average: 182626.6768 Count: 367 Sum: 40908375.6 + OD 100% - OENG g A 23:23 03-11-2019 0

Book1 - Microsoft Excel - X Home Insert Page Layout Formulas Data Review View * Cut Copy - General Wrap Text 3 Merge & Center 1 1 - 3 Autosum * Calibri 11 - A A BIU - DA Font - % 8.09 Paste Format Painter Clipboard Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells - fe A1 A1 ГДА C D E F G H I J K L 76 77 78 Number of Procedure=(A) Activity Rate per procedure=(B) Total=(A)*(B) Administration X-Ray Ultrasound 5280 $ 1.49950 $ $ 7,917.37 $ CT-Scan 3780 1.49950 $ 5,668.12 $ MRI 3290 1.49950 $ 4,933.36 $ Total 2695 1.49950 $ 4,041.16 $ 15045 1.49950 22,560.00 Depreciation=(A) Activity Rate per dollar of depreciation=(B) Total=(A)*(B) Maintenance X-Ray Ultrasound 6300 $ 0.15000 $ $ 945.00 $ CT-Scan 276500 0.15000 $ 41,475.00 $ MRI Total 466200 851000 0.15000 $ 0.15000 $ 69,930.00 $ 1,27,650.00 $ 1600000 0.15000 Total Cleaning minute=(A) Activity Rate per cleaning minute=(B) Total=(A)*(B) Sanitation X-Ray Ultrasound 26400 $ 1.50239 $ $ 39,663.18 $ CT-Scan 18900 1.50239 $ 28,395.23 $ MRI Total 49350 8 0850 1.50239 $ 1.50239 $ 74,143.10 $ 1,21,468.49 $ 175500 1.50239 2,63,670.00 MRI Utilties X-Ray Ultrasound 52800 $ 0.44793 $ $ 23.650.84 S Total procedure minute=(A) Activity Rate per procedure minute=(B) Total= A*(B) Sheet1 Sheet2 Sheet3 CT-Scan 56700 0.44793 $ 25.397.78 $ 98 99 Total 1 34750 0.44793 $ 60.358.92 $ 82250 0.44793 $ 36.842.46 $ 326500 0.44793 1.46.250.00 Ready Average: 182626.6768 + Count: 367 Sum: 40908375.6 OP OD 100% ve ^ ENG 23:23 03-11-2019

Book1 - Microsoft Excel - X Home Insert Page Layout Formulas Data Review View * Cut Copy - General - D E Autosum A7 Calibri 11 - A A BIU - DA Font Wrap Text 3 Merge & Center Paste Format Painter Clipboard - E Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells - fe C D E F G H J K L A1 A1 ΓΔ Α 82 83 84 Depreciation=(A) Activity Rate per dollar of depreciation=(B) Total=(A)*(B) Maintenance X-Ray Ultrasound 6300 $ 0.15000 $ $ 945.00 $ CT-Scan 276500 0.15000 $ 41,475.00 $ MRI Total 466200 851000 0.15000 $ 0.15000 $ 69,930.00 $ 1,27,650.00 $ 1600000 0.15000 2,40,000.00 Total Cleaning minute=(A) Activity Rate per cleaning minute=(B) Total=(A)*(B) Sanitation X-Ray Ultrasound 26400 $ 1.50239 $ $ 39,663.18 $ CT-Scan 18900 1.50239 $ 28,395.23 $ MRI Total 49350 80850 1.50239 $ 1.50239 $ 74,143.10 $ 1,21,468.49 $ 175500 1.50239 2,63,670.00 Total procedure minute=(A) Activity Rate per procedure minute=(B) Total=(A)*(B) Utilties X-Ray Ultrasound 52800 $ 0.44793 $ $ 23,650.84 $ CT-Scan 56700 0.44793 $ 25,397.78 $ 82250 0.44793 $ 36,842.46 $ Total 1 34750 0.44793 $ 60,358.92 $ 326500 0.44793 1,46,250.00 Activity based costing is more helpful then traditional costing because its disggregated data give precise breakdown of all indirect 101 3) 1021 cost. Sheet1 Sheet2 Sheet3 Ready Average: 182626.6768 Count: 367 Sum: 40908375.6 OP OD 100% ve ^ ENG + . 23:23 03-11-2019