Chapter 1, Problem 1E

EXERCISE 1—1 Identifying Direct and Indirect Costs LO1-1

Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics.

Required:

For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column.

Cost		Cost Object	Direct Cost	Indirect cost
Ex.	Catered food served to patients	A particular patient	X
1.	The wages of pediatric nurses	The pediatric department
2.	2. prescription drugs	A particular patient
3.	Heating the hospital	The pediatric department
4.	The salary of the head of pediatrics	The pediatric department
5.	The salary of the head of pediatrics	A particular pediatric patient
6.	Hospital chaplain's salary	A particular patient
8.	Lab tests by outside contractor	A particular patient