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Rowley'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
Rowley'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?" Click the icon to view the budgeted information.) E: (Click the icon to view additional information.) Read the requirements. Requirement 1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRI using direct technician labor costs as the allocation basis. Start by calculating the budgeted overhead rate for total indirect costs based on total labor. First select the formula, then enter the applicable amounts and calculate the rate. (Round your answer to two decimal places, X.XX. Abbreviations used: DC = Direct cost, DL = Direct labor, $ = dollar.) Budgeted overhead rate X ta erfd pr sa i Data Table ve tel ete erh Rowley's Radiology Center Budgeted Information for the year Ended May 31, 2017 X-rays Ultrasound CT scan MRI Total Technician labor 117,450 $ 154,000 $ 169,000 $ 156,000 $ 596,450 Depreciation 106,800 201,000 300,200 692,000 1,300,000 Materials 22,200 16,300 24,200 30,800 93,500 Administration 18,620 Maintenance 260,000 Sanitation 271,425 Utilities 106,050 $ Total 246,450 $ 371,300 $ 493,400 $ 878,800 $ 2,646,045 Number of procedures 2,555 4,760 3,290 2,695 Minutes to clean after each procedure 10 10 40 Minutes for each procedure 5 20 15 40 20 Print Done i X 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 X i 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. Print Done
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