RidgeRidge's

Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. 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 vice president 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?"

Requirements 1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRI using direct technician labor costs as the allocation basis. 2. Calculate the budgeted cost per service of X-rays, ultrasounds, CT scans, and MRI if RRC allocated overhead costs using activity-based costing 3. Explain how the disaggregation of information could be helpful to RRC's intention to continuously improve its services. Data Table Ridge's Radiology Center Budgeted Information for the year Ended May 31, 2017 X-rays Ultrasound CT scan MRI Technician labor $ 61,000 $ 85,593 $ 71,512 $ 103,000 $ Depreciation 28,000 270,000 442,000 900,000 Materials 22,500 16,700 24,400 31,600 Administration Total 321,105 1,640,000 95,200 20,610 246,000 253,000 122.600 Maintenance Sanitation Utilities $ 111,500 $ 372,293 $ 537,912 $ 1,034,600 $ 2,698,515 3,840 2,500 Number of procedures Minutes to clean after each procedure Minutes for each procedure 4,400 10 15 3,000 15 20 30 40 * Data Table RRC operates at capacity. The proposed allocation bases for overhead are: Administration Number of procedures Maintenance (including parts) Capital cost of the equipment (use Depreciation) Sanitation Total cleaning minutes Utilities Total procedure minutes Print Done