The Northshire Hospital Trust operates twoperiod typesare of estimated specialist as X-ray scanning machines, XR1 and XR50. Details for the next follows: Machine

X R1

Running hours

1100 ()

2000 ()

275 00 20 000

640 00 97 500

Variable running costs (excluding plates) Fixed costs

XR50

A brain scan is normally carried out on machine type XR1: this task uses special X-ray plates costing 40 each and takes four hours of machine time. Because of the nature of the process, around 10% of the scans produce blurred and therefore useless results.

Required: (a) Calculate the cost of a satisfactory brain scan on machine type XR1. (7 marks)

(b) Brain sca ns can als o be done on ma chine type X R50 and wou ld take on ly 1.8 hours per scan with a reduced reject rate of 6%. However, the cost of the X-ray plates would be 55 per scan.

Required: Advise which type should be used, assuming sufficient capacity is available on both types of machine. (8 marks) (Total marks 15) CIMA Stage 1 Cost Accounting