The Northshire Hospital Trust operates two

types of specialist X-ray scanning machine, XR1 and XR50.

Details for the next period are estimated asfollows:

MachineXR1XR50

Runninghours11002000

()()

Variable running costs

(excludingplates)2750064000

Fixedcosts2000097500

A brain scan is normally carried outon machine type XR1: thistask

uses special X-ray plates costing 40 each and takes four hoursof

machine time. Because of the nature ofthe process, around 10 per

cent of the scansproduce blurred and therefore useless results.

Required:

(a)

Calculate the cost of a satisfactory brain scan on

machine type XR1.

(b)

Brain scans can also be done on machine type XR50 and

would take only 1.8 hours per scanwith a reduced reject

rate of 6per cent. However, the cost ofthe X-ray plates

would be 55 per scan.