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 decic 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 Expenses Lab Tests Utilities $200,000 Administration 2,000 500,000 Laboratory 2,000 625,000 Day-op suite 3,000 1,400,000 4,000 Cystoscopy 1,500 300,000 500 Endoscopy 1,500 600,000 500 Total 10,000 $3,375,000 5,000 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 decic 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 Expenses Lab Tests Utilities $200,000 Administration 2,000 500,000 Laboratory 2,000 625,000 Day-op suite 3,000 1,400,000 4,000 Cystoscopy 1,500 300,000 500 Endoscopy 1,500 600,000 500 Total 10,000 $3,375,000 5,000 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 decic
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
Expenses
Lab Tests
Utilities
$200,000
Administration
2,000
500,000
Laboratory
2,000
625,000
Day-op suite
3,000
1,400,000
4,000
Cystoscopy
1,500
300,000
500
Endoscopy
1,500
600,000
500
Total
10,000
$3,375,000
5,000
What are the endoscopy department's total expenses?
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