Department and activity cost rates, service sector. Radhika’s Radiology Centre (RRC) i performs x-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top _1. Budgeted cost for service, Radiology Centre in the area. RRC has achieved this status because it constantly re-examines _ $50.16 per X-ray its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The VP 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?”

The following budgeted information is available:

REQUIRED 1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs using the direct technician labour as the cost allocation base.
2. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs if RRC allocated overhead costs using activity-based costing (ABC).
3. Explain how the disaggregation of information could be helpful to RRC’s intention to continuously improve its services.LO1

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Radhika's Radiology Centre Budgeted Information For the Year Ending May 30, 2011 X-Rays Ultrasound CT Scan MRI Total Technician labour $61,440 $105,600 $ 96,000 $ 105,000 $ 368,040 Amortization 32,240 268,000 Materials 22,080 16,500 439,000 24,000 897,500 1,636,740 31,250 93,830 Administration Maintenance Sanitation 20,610 247,320 196,180 Utilities 134,350 Totals $115,760 $390,100 $559,000 $1,033,750 $2,697,070 Number of procedures 3,840 4,400 3,000 2,500 Minutes to clean after each procedure 5 5 15 35 Minutes for each procedure 50 15 20 45