Sandy Lodges Hospital historically has used a facility-wide cost-to-charge ratio to determine the cost of various procedures. Cost and revenue data for a 12-month period are as follows:

a. Calculate the facility-wide cost-to-charge ratio for Sandy Lodges Hospital.

b. Using the cost-to-charge ratio from part (a), calculate the cost of an emergency room visit that resulted in a charge of \(\$ 7,500\).

c. Why is the cost-to-charge ratio inadequate for making cost-based decisions in a hospital setting?

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Revenue Center Nursing Coronary care Radiology Costs $ 600,000 1,500,000 750,000 Charges $ 750,000 2,300,000 1,500,000 Laboratory 300,000 800,000 Emergency room 500,000 950,000