the radiology Center of Gwinnett (RCG) performs radiographie, ultrasound,CT, and MRI imaging services.

Assignment 05: Radiology Center of Gwinnett: Traditional vs ABC Costing Methods The Radiology Center of Gwinnett (RCG) performs radiographic, ultrasound, CT, and MRI imaging services. RCG has developed a reputation as a top Radiology Center in the region because of its commitment to a continuous improvement review process. RCG currently uses a single, facility-wide indirect cost allocation rate based on technician labor hours. The VP of Finance believes that RCG can make 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 cost accounting too?" The table below summarizes the relevant budgeted information from the 2nd Quarter, 2021. Radiology Center of Gwinnett Budgeted information for the 2nd Quarter 2020 Radiographic Ultrasound CT MRI Total Standard billing rate per procedure $250 $250 $525 $650 Quarterly direct cost budget: Consumable materials $22,080 $16,500 $24,000 $31,250 $93,830 Technician labor $61,440 $105,600 $96,000 $105,000 $368,040 Quarterly indirect cost budget: Depreciation & Maintenance $984,060 Administration $95,610 Facility Sterilization $196,180 Utilities $134,350 Total indirect cost budget $1,410,200 Quarterly operational data: Minutes for procedures 19,200 22,000 45,000 87,500 173,700 Technician labor hours (TLH) 2,048 2 , 458 3 , 200 3,000 10,706 Post-procedure minutes 19,200 66,000 60,000 112,500 257,700 Number of procedures 3 , 840 4,400 3,000 2,500 13,740 The proposed activity-based cost (ABC) assignment bases for indirect costs are: Depreciation and Maintenance - minutes for procedures Administration - TLH . Facility Sterilization - post-procedure minutes Utilities - number of procedures Required: (be sure to document all your work) 1. Determine the gross profit per radiographic, ultrasound, CT scan, and MRI procedure based on the facility-wide indirect allocation rate that RCG is currently using. 2 . Determine the gross profit per radiographic, ultrasound, CT scan, and MRI procedure assuming RCG uses activity-based cost rates as proposed by the VP of Finance. 3. Briefly discuss the results HINT: Since the cost of materials and labor is provided at the lines of service level, you will probably find it helpful to allocate costs to the lines of service first, then compute the cost per procedure. See the Maglie Company Demo video series as a reference