This assignment is designed to help you learn how to determine total costs by combining direct and indirect costs for a particular department. In this GHA, you will be determining the total costs for three departments: (1) Physical Therapy (2) Occupational Therapy and (3) Speech Therapy. To determine the total costs, you will need to add the direct costs to the indirect costs. There are two parts to this assignment: Part I presents you with a sample scenario and walks you through the required calculations. Part II presents you with a new scenario and requires you to complete the calculations on your own, based on what you learned in Part I. PART I: SAMPLE SCENARIO AND CALCULATIONS DIRECT COSTS The direct costs for each department are easily identifiable, because they are the costs that are directly attributable to the department. The direct costs are as follows: Physical Therapy (PT) 410,000 Occupational Therapy (OT) 190,000 Speech Therapy (ST) 120,000 Total Direct Costs 720,000 INDIRECT COSTS The indirect costs will need to be allocated to Physical Therapy (PT), Occupational Therapy (OT), and Speech Therapy (ST). The indirect costs in this scenario have been identified as: (1) Clerical Salaries, (2) Administrative Salaries, and (3) Computer Services. The total indirect costs that need to be allocated to PT, OT, and ST are as follows: Clerical Salaries 60,000 Administrative Salaries 50,000 Computer Services 75,000 Total Indirect Costs 185,000 Each type of indirect cost will need to be allocated to each department based on an allocation basis that is appropriate for the particular type of cost. Clerical Salaries will be allocated based on Visit Volume. The idea being that the more patients the department sees, the more clerical work that will be required. Administrative Salaries will be allocated based on the Proportion of Direct Costs. The idea being that the higher the overall direct costs, the more the department will require administrative oversight. Computer Services will be allocated based on the Number of Computers in Service. The idea being that the more computers the department has, the more computer support it will need. Now that you understand the facts, here is an explanation of how to approach assessing the direct and indirect costs for each department. Step 1: Set-up a Table of Direct and Indirect Costs Direct Cost Indirect Cost Total Physical Therapy (PT) 410,000 Occupational Therapy (OT) 190,000 Speech Therapy (ST) 120,000 Totals 720,000 Step 2: Determine the indirect costs that should be allocated from Clerical Salaries, Administrative Salaries, and Computer Services to PT, OT, and ST. Clerical Salaries The total indirect costs for Clerical Salaries is 60,000. Clerical Salaries will be allocated based on Visit Volume. The Visit Volume for PT, OT, and ST are as follows: Physical Therapy (PT) 8,500 Occupational Therapy (OT) 4,000 Speech Therapy (ST) 2,500 Total Visit Volume 15,000 Based on this Visit Volume, the percentage of Visit Volume by department is as follows: Physical Therapy (PT) 8,500 57% Occupational Therapy (OT) 4,000 27% Speech Therapy (ST) 2,500 17% Total 15,000 100% Use the percentage of Visit Volumes to determine the allocation of the Indirect Costs for Clerical Salaries: Total indirect costs for Clerical Salaries $60,000 Physical Therapy (PT) 57% $34,000 Occupational Therapy (OT) 27% $16,000 Speech Therapy (ST) 17% $10,000 Total Indirect Costs 100% $60,000 Administrative Salaries The total indirect costs for Administrative Salaries is 50,000. Administrative Salaries will be allocated based on the proportion (%) of direct costs. The Direct Costs for PT, OT, and ST are as follows: Physical Therapy (PT) 410,000 Occupational Therapy (OT) 190,000 Speech Therapy (ST) 120,000 Total Visit Volume 720,000 The proportion of these direct costs is as follows: Physical Therapy (PT) 410,000 57% Occupational Therapy (OT) 190,000 26% Speech Therapy (ST) 120,000 17% Total 720,000 100% Use the proportion of the direct costs to determine the allocation of the Indirect Costs for Administrative Salaries: Total indirect costs for Clerical Salaries $50,000 Physical Therapy (PT) 57% $28,472 Occupational Therapy (OT) 26% $13,194 Speech Therapy (ST) 17% $8,333 Total Indirect Costs 100% $50,000 Computer Services The total indirect costs for Computer Services is 75,000. Computer Services will be allocated based on the number of computers in service. The number of computers in service for PT, OT, and ST are as follows: Physical Therapy (PT) 9 Occupational Therapy (OT) 3 Speech Therapy (ST) 3 Total Visit Volume 15 The proportion of computers in service is as follows: Physical Therapy (PT) 9 60% Occupational Therapy (OT) 3 20% Speech Therapy (ST) 3 20% Total 15 100% Use the proportion of the numbers of computers in service to determine the allocation of the Indirect Costs for Computer Services: Total indirect costs for Computer Services $75,000 Physical Therapy (PT) 60% $45,000 Occupational Therapy (OT) 20% $15,000 Speech Therapy (ST) 20% $15,000 Total Indirect Costs 100% $75,000 Step 3: Determine to total indirect costs for PT, OT and ST. Based on your calculations in Step 2, you can create a table to determine the total indirect costs for PT, OT, and ST: Clerical Administrative Computer TOTAL Salaries Salaries Services INDIRECT COSTS Physical Therapy (PT) 34,000 28,472 $45,000 107,472 Occupational Therapy (OT) 16,000 13,194 $15,000 44,194 Speech Therapy (ST) 10,000 8,333 $15,000 33,333 Total Indirect Costs 60,000 50,000 75,000 185,000 Step 4: Add the total indirect costs by department from Step 3 to your table that you created in Step 1. Direct Cost Indirect Cost Total Physical Therapy (PT) 410,000 107,472 Occupational Therapy (OT) 190,000 44,194 Speech Therapy (ST) 120,000 33,333 Total 720,000 185,000 Once you insert the total indirect costs by department, you can calculate your Total column (direct costs plus indirect costs): Direct Cost Indirect Cost Total Physical Therapy (PT) 410,000 107,472 517,472 Occupational Therapy (OT) 190,000 44,194 234,194 Speech Therapy (ST) 120,000 33,333 153,333 Total 720,000 185,000 905,000 PART II: NEW SCENARIO - GHA 4 To complete PART II, you will need to follow the same process as Part I. In this scenario, the direct costs have remained the same, however the indirect costs and allocation basis have been changed. Here is the information that you will need to complete Part II. The only portion of this file that you are required to submit is the yellow highlighted box at the bottom of this page. However, you are encouraged to "show your work" in case you have the opportunity to receive partial credit. DIRECT COSTS The direct costs for each department are easily identifiable, because they are the costs that are directly attributable to the department. The direct costs are as follows: Physical Therapy (PT) 410,000 Occupational Therapy (OT) 190,000 Speech Therapy (ST) 120,000 Total Direct Costs 720,000 INDIRECT COSTS The indirect costs will need to be allocated to Physical Therapy (PT), Occupational Therapy (OT), and Speech Therapy (ST). The indirect costs in this scenario have been identified as: (1) Clerical Salaries, (2) Administrative Salaries, and (3) Computer Services. The total indirect costs that need to be allocated to PT, OT, and ST are as follows: Clerical Salaries 56,000 Administrative Salaries 55,000 Computer Services 80,000 Total Indirect Costs 191,000 Each type of indirect cost will need to be allocated to each department based on an allocation basis that is appropriate for the particular type of cost. Clerical Salaries will be allocated based on Visit Volume. Administrative Salaries will be allocated based on the Proportion of Direct Costs Computer Services will be allocated based on the Number of Computers in Service. The Visit Volume, Direct Costs, and Computers In Service are as follows: Visit Direct Computers Volume Costs in Service Physical Therapy (PT) 9,600 56,000 10 Occupational Therapy (OT) 4,000 55,000 3 Speech Therapy (ST) 2,400 80,000 3 Total 16,000 191,000 16 You may find it helpful to use these templates to complete your worksteps. Clerical Salaries The total indirect costs for Clerical Salaries is ____________. Clerical Salaries will be allocated based on Visit Volume. The Visit Volume for PT, OT, and ST are as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Visit Volume Based on this Visit Volume, the percentage of Visit Volume by department is as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Use the percentage of Visit Volumes to determine the allocation of the Indirect Costs for Clerical Salaries: Total indirect costs for Clerical Salaries Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Indirect Costs Administrative Salaries The total indirect costs for Administrative Salaries is _______________. Administrative Salaries will be allocated based on the proportion (%) of direct costs. The Direct Costs for PT, OT, and ST are as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Visit Volume The proportion of these direct costs is as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Use the proportion of the direct costs to determine the allocation of the Indirect Costs for Administrative Salaries: Total indirect costs for Clerical Salaries Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Indirect Costs Computer Services The total indirect costs for Computer Services is ___________. Computer Services will be allocated based on the number of computers in service. The number of computers in service for PT, OT, and ST are as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Visit Volume The proportion of computers in service is as follows: Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Use the proportion of the numbers of computers in service to determine the allocation of the Indirect Costs for Computer Services: Total indirect costs for Computer Services Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Indirect Costs Step 3: Determine to total indirect costs for PT, OT and ST. Based on your calculations in Step 2, you can create a table to determine the total indirect costs for PT, OT, and ST: TOTAL Clerical Administrative Computer INDIRECT Salaries Salaries Services COSTS Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Indirect Costs Step 4: Add the total indirect costs by department from Step 3 to your table that you created in Step 1. Direct Cost Indirect Cost Total Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total Once you insert the total indirect costs by department, you can calculate your Total column (direct costs plus indirect costs): Direct Cost Indirect Cost Total Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total For this GHA, you need to complete and submit the following table based on the information in Part II, above. Direct Cost Indirect Cost Total Physical Therapy (PT) Occupational Therapy (OT) Speech Therapy (ST) Total