PROBLEM 2-24 Variable and Fixed Costs; Subtleties of Direct and Indirect Costs [LO5, LO6] The Central Area Well-Baby Clinic provides a variety of health services to newborn babies and their parents. The clinic is organized into a number of departments, one of which is the Immunization Center. A number of costs of the clinic and the Immunization Center are listed below. Example: The cost of polio immunization tablets a. The salary of the head nurse in the Immunization Center. b. Costs of incidental supplies consumed in the Immunization Center, such as paper towels. c. The cost of lighting and heating the Immunization Center. d. The cost of disposable syringes used in the Immunization Center. e. The salary of the Central Area Well-Baby Clinic’s information systems manager. f. The costs of mailing letters soliciting donations to the Central Area Well-Baby Clinic. g. The wages of nurses who work in the Immunization Center. h. The cost of medical malpractice insurance for the Central Area Well-Baby Clinic. i. Depreciation on the fi xtures and equipment in the Immunization Center. Required: For each cost listed above, indicate whether it is a direct or indirect cost of the Immunization Center, whether it is a direct or indirect cost of immunizing particular patients, and whether it is variable or fi xed with respect to the number of immunizations administered. Use the form shown below for your answer. Variable or Fixed Direct or Direct or with Respect Indirect Cost of Indirect Cost of to the Number the Immunization Particular of Immunizations Center Patients Administered Item Description Direct Indirect Direct Indirect Variable Fixed Example: The cost of polio immunization tablets . . . . . . . . . . . . . . . . X X X
PROBLEM 2-24 Variable and Fixed Costs; Subtleties of Direct and Indirect Costs [LO5, LO6]
The Central Area Well-Baby Clinic provides a variety of health services to newborn babies and their
parents. The clinic is organized into a number of departments, one of which is the Immunization
Center. A number of costs of the clinic and the Immunization Center are listed below.
Example: The cost of polio immunization tablets
a. The salary of the head nurse in the Immunization Center.
b. Costs of incidental supplies consumed in the Immunization Center, such as paper towels.
c. The cost of lighting and heating the Immunization Center.
d. The cost of disposable syringes used in the Immunization Center.
e. The salary of the Central Area Well-Baby Clinic’s information systems manager.
f. The costs of mailing letters soliciting donations to the Central Area Well-Baby Clinic.
g. The wages of nurses who work in the Immunization Center.
h. The cost of medical malpractice insurance for the Central Area Well-Baby Clinic.
i.
Required:
For each cost listed above, indicate whether it is a direct or indirect cost of the Immunization
Center, whether it is a direct or indirect cost of immunizing particular patients, and whether it is
variable or fi xed with respect to the number of immunizations administered. Use the form shown
below for your answer.
Variable or Fixed
Direct or Direct or with Respect
Indirect Cost of Indirect Cost of to the Number
the Immunization Particular of Immunizations
Center Patients Administered
Item Description Direct Indirect Direct Indirect Variable Fixed
Example: The cost of polio
immunization
tablets . . . . . . . . . . . . . . . . X X X
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