Analysis of costs by behaviour for decision-making The Northshire Hospital Trust operates two types of specialist X-ray scanning machines, XR1 and XR50. Details for the next period are estimated as follows:

A brain scan is normally carried out on machine type XR1: this task uses special X-ray plates costing 40 each and takes four hours of machine time. Because of the nature of the process, around 10% of the scans produce blurred and therefore useless results. Required:

(a) Calculate the cost of a satisfactory brain scan on machine type XR1. (7 marks)

(b) Brain scans can also be done on machine type XR50 and would take only 1.8 hours per scan with a reduced reject rate of 6%. However, the cost of the X-ray plates would be 55 per scan. Required: Advise which type should be used, assuming sufficient capacity is available on both types of machine. (8 marks)

Transcribed Image Text:

Machine XR1 XR50 Running hours 1 100 2000 () () Variable running costs 27 500 64 000 (excluding plates) Fixed costs 20000 97 500