Cost allocation. Use the information in Exhibit 12.11 to answer these questions. a. Louis Clark, the new administrator for the surgical clinic, was trying to figure out how to allocate his indirect expenses. His staff were complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities expense based on square footage for each department, to allocate administration expense based on direct costs, and to allocate laboratory expense based on tests. What would the results be? EXHIBIT 12.11 BASIC STATISTICS FOR COST ALLOCATION IN A SURGERY CLINIC USED IN PROBLEM 12.11 b. Carol West, the nurse manager of the cystoscopy suite, was given approval to add more space to her current area by converting 500 square feet of administrative space into another cystoscopy bay. What will her new fully allocated expenses be? (Assume that there are no new additional costs incurred by adding the 500 square feet.) c. Bobbie Jones, the manager of the endoscopy suite, is concerned about adding more space. She contends that if the cystoscopy and endoscopy units were combined, fewer staff would be needed and direct costs could be reduced by $50,000 ( $25,000 in each unit). She also feels that the dayop area is underutilized, and that 500 square feet could be used by a combined unit when excess capacity was needed. Assuming that the 500 square feet were to be allocated equally between the endoscopy and cystoscopy suites, what would the total allocated costs for each of these two services be under this scenario? Cost allocation. Use the information in Exhibit 12.11 to answer these questions. a. Louis Clark, the new administrator for the surgical clinic, was trying to figure out how to allocate his indirect expenses. His staff were complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities expense based on square footage for each department, to allocate administration expense based on direct costs, and to allocate laboratory expense based on tests. What would the results be? EXHIBIT 12.11 BASIC STATISTICS FOR COST ALLOCATION IN A SURGERY CLINIC USED IN PROBLEM 12.11 b. Carol West, the nurse manager of the cystoscopy suite, was given approval to add more space to her current area by converting 500 square feet of administrative space into another cystoscopy bay. What will her new fully allocated expenses be? (Assume that there are no new additional costs incurred by adding the 500 square feet.) c. Bobbie Jones, the manager of the endoscopy suite, is concerned about adding more space. She contends that if the cystoscopy and endoscopy units were combined, fewer staff would be needed and direct costs could be reduced by $50,000 ( $25,000 in each unit). She also feels that the dayop area is underutilized, and that 500 square feet could be used by a combined unit when excess capacity was needed. Assuming that the 500 square feet were to be allocated equally between the endoscopy and cystoscopy suites, what would the total allocated costs for each of these two services be under this scenario