David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below. Square Footage Direct Lab Tests Expenses $200,000 Utilities Administration 2,000 Laboratory Day-op suite Cystoscopy Endoscopy 500,000 625,000 2,000 3,000 1,500 1,500 1,400,000 300,000 4,000 500 600,000 $3,375,000 500 Total 10,000 5,000 62 500 What are the endoscopy department's total expenses?
David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below. Square Footage Direct Lab Tests Expenses $200,000 Utilities Administration 2,000 Laboratory Day-op suite Cystoscopy Endoscopy 500,000 625,000 2,000 3,000 1,500 1,500 1,400,000 300,000 4,000 500 600,000 $3,375,000 500 Total 10,000 5,000 62 500 What are the endoscopy department's total expenses?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:David Jones, the new administrator for a surgical clinic, was trying to determine how to
allocate his indirect expenses. His staff was complaining that the current method of taking a
percentage of revenues was unfair. He decided to try to allocate utilities based on square
footage of each department, administration based on direct costs, and laboratory based on
tests. Use the information in the chart below.
Square Footage
Direct
Lab Tests
Expenses
$200,000
500,000
625,000
1,400,000
300,000
600,000
$3,375,000
Utilities
Administration 2,000
Laboratory
Day-op suite
Cystoscopy
Endoscopy
2,000
3,000
1,500
1,500
10,000
4,000
500
500
Total
5,000
62500
What are the endoscopy department's total expenses?
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