Images 12.10, 12.12, and 12.14 are all there.

10) Activity based costing. Referring to exhibit 12.10, suppose that instead of 2000, 5000, and 3000 for an initial, regular and intensive visit, respectively, the number of visits was 2500, 6000, and 1500. Assume that the costs associated with intake, new visits, medical records and billing do not change in number or distribution.

a) Would there be a change in the overhead cost per visit of an initial visit using either the conventional or ABC methods?

b) Would there be a change in the total overhead cost of initial visits using either the conventional or ABC methods.

12) Use the information in exhibit 12.12 to answer these questions.

a) D Clark, the new administrator for the surgical clinic, was trying to figure out how to allocate the overhead expenses. He decided to try to allocate utilities based on square footage of each department, to allocate administration based on direct costs, and to allocate laboratory based on tests. How would indirect costs be distributed as a result?

b) Joe Ryan, the director of laboratories, was given approval to add 250 square to the lab by expanding into the day op suite which lost the space. What will his new fully allocated expenses be? Assume there are no additional costs incurred by adding the 250 square feet.

c) Mary 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 reduced by $40,000 ($20,000) in each unit. She also feels that the day op area is underutilized and that 200 square feet could be used by a combined unit when excess capacity was needed. Assuming that the 200 square feet were to be allocated weekly between endoscopy and cystoscopy suites in addition to renovations as described in part B, what would the total allocated costs for each of these two services be under this scenario?

14) Use the information in Exhibit 12.14 to answer these questions

a) What is the per unit cost of an initial, regular, and intensive visit using the conventional and ABC approaches?

b) What is the total cost of initial, regular, and intensive visits using the conventional and ABC approaches?

EXHIBIT 12.10 A COMPARISON OF A CONVENTIONAL AND AN ABC APPROACH TO COSTING THREE SERVICES Givens: overall percentages and totals GD GE GF Visit Type Initial Regular Intensive Row Total Ovorhead Total Total Annual Hours Number of visits Number of new visits 80% Direct materials (etc.) 10% 10,000 2,500 $50,000 Intake or referral Medical records 70% 2,040 Total overhead $175,000 Basic Data: Total Cost by Visit Type Calculation of Cost: Unit by Visit Type Initial Regular Intensive Total Cost per Unit (Given) Given) (Given) (A BC) Initial Regular Intensive Formula | 1 Number of visits 2,000 5,000 3,000 10,000 | 2 Direct materials etc. 5,000 $15,000 $30,000 $50,000 $2.50 $3.00 $10.00 (Row 2/ Row 3 Direct labor 4 Estimated overhead itotal is a given) s Cost per visit: conventional method $90,000 $135,000 $225,000 $450,000 $45.00 $27.00 $75.00 (Row 3/Row 1 $175,000 $17.50 $17.50 $1750 (04/D1) $65.00 $47.50 $102.50 Sum: Rows 2-4) EXHIBIT 12.1O (CONTINUED) (1) Annual projections of overhead costs by activity and cost driver: (2) Unit cost calculations for these overhead activities Cost and Cost Driver Information Driver Units Unit Cost (Given) (Given) New visits Hours spent Activity (Given) 6 Intake 7 Medical records 8 Billing $26,250 $26,250 $52,500 $70,000 $175,000 2,500 new visits 2,040 hours 4,080 hours 10,000 visits $10.50 per new visit $12.87 per hour $12.87 per hour $7.00 per visit | 10 Total (3) Basic data: actual annual operating results of cost drivers to be used in assigning ABC overhead cost Visit Type Intensive Initial (Given) (M +N+O) (Given) 11 New visits 12 Medical records 13 Billing (Continued) EXHIBIT 12.10 A COMPARISON OF A CONVENTIONAL AND AN ABC APPROACH TO COSTING THREE SERVICES Givens: overall percentages and totals GD GE GF Visit Type Initial Regular Intensive Row Total Ovorhead Total Total Annual Hours Number of visits Number of new visits 80% Direct materials (etc.) 10% 10,000 2,500 $50,000 Intake or referral Medical records 70% 2,040 Total overhead $175,000 Basic Data: Total Cost by Visit Type Calculation of Cost: Unit by Visit Type Initial Regular Intensive Total Cost per Unit (Given) Given) (Given) (A BC) Initial Regular Intensive Formula | 1 Number of visits 2,000 5,000 3,000 10,000 | 2 Direct materials etc. 5,000 $15,000 $30,000 $50,000 $2.50 $3.00 $10.00 (Row 2/ Row 3 Direct labor 4 Estimated overhead itotal is a given) s Cost per visit: conventional method $90,000 $135,000 $225,000 $450,000 $45.00 $27.00 $75.00 (Row 3/Row 1 $175,000 $17.50 $17.50 $1750 (04/D1) $65.00 $47.50 $102.50 Sum: Rows 2-4) EXHIBIT 12.1O (CONTINUED) (1) Annual projections of overhead costs by activity and cost driver: (2) Unit cost calculations for these overhead activities Cost and Cost Driver Information Driver Units Unit Cost (Given) (Given) New visits Hours spent Activity (Given) 6 Intake 7 Medical records 8 Billing $26,250 $26,250 $52,500 $70,000 $175,000 2,500 new visits 2,040 hours 4,080 hours 10,000 visits $10.50 per new visit $12.87 per hour $12.87 per hour $7.00 per visit | 10 Total (3) Basic data: actual annual operating results of cost drivers to be used in assigning ABC overhead cost Visit Type Intensive Initial (Given) (M +N+O) (Given) 11 New visits 12 Medical records 13 Billing (Continued)