Chapter 1, Problem 3PA

A partial list of Foothills Medical Center’s costs follows:

1. a. Advertising hospital services on television
2. b. Blood tests
3. c. Cost of drugs used for patients
4. d. Cost of maintaining the staff and visitors’ cafeteria
5. e. Cost of building a new heart wing
6. f. Cost of X-ray test
7. g. Depreciation of patient rooms
8. h. Depreciation of X-ray equipment
9. i. Doctor’s fee
10. j. General maintenance costs of the hospital
11. k. Improvements on the employee parking lot
12. l. Intravenous solutions used for patients
13. m. Laundry services for operating room personnel
14. n. Operating room supplies used on patients (catheters, sutures, etc.)
15. o. Overtime incurred in the Patient Records Department due to a computer failure
16. p. Patient meals
17. q. Nurses’ salaries
18. r. Salary of the nutritionist
19. s. Salary of intensive care personnel
20. t. Training costs for nurses
21. u. Utility costs of the hospital

Instructions

1. What would be Foothills Medical Center’s most logical definition for the final cost object?

2. Identify whether each of the costs is to be classified as direct or indirect. For purposes of classifying each cost as direct or indirect, use the patient as the cost object.