David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below.

What are the day-op suite's total expenses?

Square Footage Lab Tests Utilities Administration 2.000 Laboratory 2.000 Day-op suite 3,000 Cystoscopy 1,500 Endoscopy 1,500 Total 10,000 Direct Expenses $200,000 500,000 625,000 1,400,000 300,000 600,000 $3,375,000 4,000 500 500 5,000