QUESTION 3. The main medical activities at the Newmarket University Hospital are administered through three medical departments - Day Procedures, Obopedic and Surgical. These are supported by three service cost centres - Fopd Catering, Administration and Laundry. Budgeted variable overhead for the year is detailed below for each of the six cost centres. Also given are details of budgeted service usage (volume of activity) by area. Service Departments Medical Billing Departments Admin. Laundry Day Procedures Ouakredic Surgical Total Catering 68,240 16.200 19,150 48.000 60.000 252,520 467,120 Budgeted Overhead Budgeted Meals Budgeted Files managed . 2,000 500 8,150 32,000 42,650 500 3.000 13,000 20,000 Budgeted loads of Washing 1,200 400 8,400 10,000 Budgeted volume of activity 825 N/A 1,200 procedures performed patient days 5.000 patient days Required (a) Reallocate the service department budgeted overheads using the step method, choosing the most appropriate basis of allocation for each department (25 marks) (b) Then estimate the budgeted level of variable overhead per unit of the budgeted activity volume in cach medical/billing department. (10 marks) AND Different firms do their product costing in different ways with varying levels of detail. Some firms might use traditional cost allocations while others adopt newer approaches like Activity Based Costing. One writer was quoted as saying "The more data a firm collects the more socurate and precise its product costing will be, and this will automatically make the firm more profitable". Discuss if this statement is true. You should refer to the factors involved in choosing the costing system or methods that are most suitable for each individual firm (15 marks) (Total: 50 Marks)