Budgeted information for this year’s operations of the X-ray resource cost pool at Diagnostic Services follows.

Theoretical capacity ........... 8,760 X-ray hours

Practical capacity ............ 5,600 X-ray hours

Budgeted capacity ............ 5,000 X-ray hours

Costs traced directly:

X-ray supplies cost function ........ $3,000 + $2.10 per X-ray hour

Electricity at $0.10 ...........6,000 kWh + 4 kWh per hour of

per kilowatt hour (kWh) .......... X-ray equipment use

X-ray equipment depreciation ......... $93,100 per year

Other resource pool cost rates:

Technician proportional cost rate ...... $45 per labor hour

Maintenance proportional cost rate ...... $20 per maintenance hour

Facilities fixed cost rate .......... $25 per square foot

The X-ray department uses 1,000 square feet of facility space. The technician and maintenance resource pools have only proportional cost rates. However, the X-ray department requires some of these resources regardless of the number of X-ray hours. Budgeted X-ray department use of these resources follows.

• X-ray technician resources: 300 technician hours + 1 technician hour per hour of X-ray equipment use

• Maintenance resources: 100 maintenance hours + 0.0424 maintenance hour per hour of X-ray equipment use

REQUIRED

A. Calculate the fixed and proportional cost rates for the X-ray department using GPK.

B. Calculate the fixed and proportional cost rates for the X-ray department using RCA.

C. Calculate the total cost under GPK and RCA that would be assigned to patient services for a patient who required X-rays taking one-half hour of time.

D. Which costing system (GPK or RCA) would assign higher cost in part (C)? Explain why.

E. Explain why part of the X-ray technician and maintenance costs are treated as fixed in the

X-ray department, even though these resources have only a proportional cost rate.