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Vincent Hospital has installed a new computer system. The system was designed and constructed based on the anticipated number of hours of usage required by
Vincent Hospital has installed a new computer system. The system was designed and constructed based on the anticipated number of hours of usage required by the various hospital departments according to projections made by the departmental managers. Virtually all of the operating costs of the system are fixed. What would be the most systematic and rational manner in which to allocate the new computer system costs to the various hospital departments? a. To each department equally. b. By the anticipated number of hours of usage. c. By actual usage by each department. d. By the revenue generated in each department. Oakmont Company has two divisions, Household Appliances and Construction Equipment. The manager of the Household Appliances Division is evaluated on the basis of return on investment (ROI). The manager of the Construction Equipment Division is evaluated on the basis of residual income. The cost of capital has been 12% and the return on investment has been 16% for the two divisions. Each manager is currently considering a project with a 14% rate of return. According to the current evaluation system for managers, which manager(s) would have incentive to undertake the project? a. Both managers would have incentive to undertake the project. b. Neither manager would have incentive to undertake the project. c. The manager of the Household Appliances Division would have incentive to undertake the project while the manager of the Construction Equipment Division would not have incentive to undertake the project. d. The manager of the Construction Equipment Division would have incentive to undertake the project while the manager of the Household Appliances Division would not have incentive to undertake the project
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