Question
Part 1 Rashaad's Radiology Centre (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top radiology centre in the
Part 1
Rashaad's Radiology Centre (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top radiology centre in the area. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The VP of Finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technology. Can't we have state-of-the-art accounting technology?"
1. | Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs using direct technician labour as the cost allocation base. |
2. | Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs if RRC allocated overhead costs using ABC. |
3. | Explain how the disaggregation of information could be helpful to RRC's intention to continuously improve its services. |
The following budgeted information is available
Requirement 1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs using direct technician labour costs as the allocation base.
Determine the formula to calculate the overhead costs allocated to each service. Next, calculate the indirect costs allocated to each service. (Do not round until the final amount; then round the costs allocated to the nearest whole number.)
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| Budgeted overhead rate |
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| x | ( |
| / |
| ) = | Indirect costs allocated to service |
Part 2
X-Rays |
| x | ( |
| / |
| ) = |
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Part 3
Ultrasound |
| x | ( |
| / |
| ) = |
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Part 4
CT Scan |
| x | ( |
| / |
| ) = |
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Part 5
MRI |
| x | ( |
| / |
| ) = |
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Part 6
Now calculate the total budgeted costs for each service using direct technician labour costs as the allocation basis. Then, calculate the budgeted cost per service. (Round the budgeted cost per service to the nearest cent.)
| X-Rays | Ultrasound | CT Scan | MRI |
Technician labour | $65,000 | $105,500 | $97,000 | $110,000 |
Depreciation | 32,600 | 266,000 | 443,000 | 893,000 |
Materials | 21,800 | 16,500 | 23,900 | 30,700 |
Indirect costs |
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Total budgeted costs |
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Part 7
Budgeted cost per service |
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Part 8
Requirement 2. Calculate the budgeted cost per service of X-rays, ultrasounds, CT scans, and MRIs if RRC allocated overhead costs using ABC.
Begin by determining the formula you will use to allocate administration costs.
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| Activity rate |
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| x | ( |
| / |
| ) = Administration costs allocated |
Part 9
Next, determine the formula you will use to allocate maintenance costs.
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| x | ( |
| / |
| ) = Maintenance costs allocated |
Part 10
Now determine the formula you will use to allocate sanitation costs.
| x ( |
| / |
| ) = | Sanitation costs allocated |
Part 11
Next, determine the formula you will use to allocate utility costs.
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| x ( |
| / |
| ) = Utility costs allocated |
Part 12
Calculate the budgeted cost for each service using activity-based costing. Use the formulas you determined above in your calculations. (Hold all decimals in interim calculations. Round final answers to the nearest whole dollar.)
| X-Rays | Ultrasound | CT Scan | MRI |
Technician labour | $65,000 | $105,500 | $97,000 | $110,000 |
Depreciation | 32,600 | 266,000 | 443,000 | 893,000 |
Materials | 21,800 | 16,500 | 23,900 | 30,700 |
Administration |
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Part 13
Maintenance |
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Part 14
Sanitation |
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Part 15
Utilities |
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Part 16
Total |
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Part 17
Now calculate the budgeted cost per service. (Round the cost per service to the nearest cent.)
| X-Rays | Ultrasound | CT Scan | MRI |
Budgeted cost per service |
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Part 18
Requirement 3. Explain how the disaggregation of information could be helpful to RRC's intention to continuously improve its services.
Using the disaggregated activity-based costing data, managers can see that
CT scans
MRIs
ultrasounds
x-rays
cost substantially more and
CT scan and MRI
MRI and ultrasounds
MRI and x-rays
x-rays and ultrasounds
substantially less than the traditional system indicated. In particular, a(n)
CT scan
MRI
ultrasound
x-ray
activity generates a lot of maintenance activity and sanitation activity. Managers should examine the use of these two activities to search for ways to
increase
reduce
the activity consumption and ultimately its
cost.
productivity.
please complete all the part
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