Managerial Accounting
7th Edition
ISBN: 9781337116008
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: South Western Educational Publishing
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Chapter 10, Problem 3MTC
To determine
Compute cost per nursing hour for OR department. In case, overall nursing cost is allocated to the department on the basis of number of patients.
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Jordan Health Care Center, Inc. has three clinics servicing the Seattle metropolitan area. The company's legal services department
supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The
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$371,300. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number
of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows.
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General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services
Fixed
$10,000,000
Variable cost per inpatient day
200
Charge (revenue) per inpatient day
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Draw a graph of the cost behavior for each of the following costs incurred by the Mountain Summit Hospital. The hospital measures monthly activity in patient days. Label both axes and the cost line in each graph.1. The cost of food varies in proportion to the number of patient days of activity. In January, the hospital provided 3,000 patient days of care, and food costs amounted to $24,000.2. The cost of salaries and fringe benefits for the administrative staff totals $12,000 per month.3. The hospital’s laboratory costs include two components: (a) $40,000 per month for compensation of personnel and depreciation on equipment and (b) $10 per patient day for chemicals and other materials used in performing the tests.4. The cost of utilities depends on how many wards the hospital needs to use during a particular month. During months with activity under 2,000 patient days of care, two wards are used, resulting in utility costs of $10,000. During months with greater than 2,000 patient days…
Chapter 10 Solutions
Managerial Accounting
Ch. 10 - Discuss the dirrerence between budgets and...Ch. 10 - Describe the relationship that unit standards have...Ch. 10 - Why is historical experience often a poor basis...Ch. 10 - Prob. 4DQCh. 10 - Explain why standard costing systems adopted.Ch. 10 - How does standard costing improve the control...Ch. 10 - Discuss the differences among actual costing,...Ch. 10 - Prob. 8DQCh. 10 - The budget variance for variable production costs...Ch. 10 - When should a standard cost variance be...
Ch. 10 - What are control limits, and how are they set?Ch. 10 - Explain why the materials price variance is often...Ch. 10 - The materials usage variance is always the...Ch. 10 - The labor rate variance is never controllable. Do...Ch. 10 - Prob. 15DQCh. 10 - What is kaizen costing? On which part of the value...Ch. 10 - What is target costing? Describe how costs are...Ch. 10 - Prob. 18DQCh. 10 - The variable overhead efficiency variance has...Ch. 10 - Describe the difference between the variable...Ch. 10 - What is the cause of an unfavorable volume...Ch. 10 - Does the volume variance convey any meaningful...Ch. 10 - Which do you think is more important for control...Ch. 10 - Prob. 1MCQCh. 10 - A currently attainable standard is one that a....Ch. 10 - An ideal standard is one that a. uses only...Ch. 10 - The underlying details for the standard cost per...Ch. 10 - The standard quantity of materials allowed is...Ch. 10 - The standard direct labor hours allowed is...Ch. 10 - Investigating variances from standard is a. always...Ch. 10 - Prob. 8MCQCh. 10 - The materials price variance is usually computed...Ch. 10 - Responsibility for the materials usage variance is...Ch. 10 - Responsibility for the labor rate variance...Ch. 10 - Responsibility for the labor efficiency variance...Ch. 10 - (Appendix 10A) Which of the following items...Ch. 10 - (Appendix 10A) Which of the following is true...Ch. 10 - The total variable overhead variance is the...Ch. 10 - A variable overhead spending variance can occur...Ch. 10 - The total variable overhead variance can be...Ch. 10 - The total fixed overhead variance is a. the...Ch. 10 - The total fixed overhead variance can be expressed...Ch. 10 - An unfavorable volume variance can occur because...Ch. 10 - Prob. 21BEACh. 10 - Control Limits During the last 6 weeks, the actual...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Rath Company showed the following information for...Ch. 10 - Variable Overhead Spending and Efficiency...Ch. 10 - Performance Report for Variable Variances Humo...Ch. 10 - Total Fixed Overhead Variance Bradshaw Company...Ch. 10 - Fixed Overhead Spending and Volume Variances,...Ch. 10 - Prob. 32BEBCh. 10 - Control Limits During the last 6 weeks, the actual...Ch. 10 - Prob. 34BEBCh. 10 - Use the following information to complete Brief...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Use the following information to complete Brief...Ch. 10 - Mulliner Company showed the following information...Ch. 10 - Variable Overhead Spending and Efficiency...Ch. 10 - Performance Report for Variable Variances Potter...Ch. 10 - Bulger Company provided the following data:...Ch. 10 - Fixed Overhead Spending and Volume Variances,...Ch. 10 - Standard Quantities of Labor and Materials...Ch. 10 - Sommers Company uses the following rule to...Ch. 10 - Use the following information for Exercises 10-45...Ch. 10 - Refer to the information for Cinturon Corporation...Ch. 10 - Refer to the information for Cinturon Corporation...Ch. 10 - Materials Variances Manzana Company produces apple...Ch. 10 - Labor Variances Verde Company produces wheels for...Ch. 10 - At the beginning of the year, Craig Company had...Ch. 10 - Jackie Iverson was furious. She was about ready to...Ch. 10 - 10-52 Materials and Labor Variances Refer to the...Ch. 10 - Refer to the information for Deporte Company...Ch. 10 - Esteban Products produces instructional aids,...Ch. 10 - Escuchar Products, a producer of DVD players, has...Ch. 10 - Use the following information for Exercises 10-56...Ch. 10 - Refer to the information for Rostand Inc. above....Ch. 10 - At the beginning of the year, Lopez Company had...Ch. 10 - Zepol Company is planning to produce 600,000 power...Ch. 10 - Last year, Gladner Company had planned to produce...Ch. 10 - Anker Company had the data below for its most...Ch. 10 - Cabanarama Inc. designs and manufactures...Ch. 10 - Basuras Waste Disposal Company has a long-term...Ch. 10 - Tom Belford and Tony Sorrentino own a small...Ch. 10 - Mantenga Company provides routine maintenance...Ch. 10 - Buenolorl Company produces a well-known cologne....Ch. 10 - The management of Golding Company has determined...Ch. 10 - Phono Company manufactures a plastic toy cell...Ch. 10 - Botella Company produces plastic bottles. The unit...Ch. 10 - The Lubbock plant of Morrils Small Motor Division...Ch. 10 - Moleno Company produces a single product and uses...Ch. 10 - The Lubbock plant of Morrils Small Motor Division...Ch. 10 - Extrim Company produces monitors. Extrims plant in...Ch. 10 - Lynwood Company produces surge protectors. To help...Ch. 10 - Shumaker Company manufactures a line of high-top...Ch. 10 - Paul Golding and his wife, Nancy, established...Ch. 10 - Prob. 79CCh. 10 - Prob. 1MTCCh. 10 - The Two Cost Systems Sacred Heart Hospital (SHH)...Ch. 10 - Prob. 3MTCCh. 10 - Prob. 4MTCCh. 10 - The Two Cost Systems Sacred Heart Hospital (SHH)...Ch. 10 - Prob. 6MTCCh. 10 - Prob. 7MTCCh. 10 - Prob. 8MTCCh. 10 - Prob. 9MTCCh. 10 - Sacred Heart Hospital (SHH) faces skyrocketing...
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- Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its two biggest nursing service linesthe Emergency Room (ER) and the Operating Room (OR). SHHs current cost system assigns total nursing costs to the ER and OR based on the number of patients serviced by each line. Total hospital annual nursing costs for these two lines are expected to equal 300,000. The table below shows expected patient volume for both lines. After discussion with several experienced nurses, Jack Bauer (SHHs accountant) decided that assigning nursing costs to the two service lines based on the number of times that nurses must check patients vital signs might more closely match the underlying use of costly hospital resources. Therefore, for comparative purposes, Jack decided to develop a second cost system that assigns total nursing costs to the ER and OR based on the number of times nurses check patients vital signs. This system is referred to as the vital-signs costing system. The earlier table also shows data for vital signs checks for lines. In an effort to better plan for and control OR costs, SHH management asked Jack to calculate the flexible budget variance (i.e., flexible budget costs - actual costs) for OR nursing costs, including the price variance and efficiency variance. Given that Jack is interested in comparing the reported costs of both systems, he decided to prepare the requested OR variance analysis for both the current cost system and the vital-signs costing system. In addition, Jack chose to use each cost systems estimate of the cost per OR nursing hour as the standard cost per OR nursing hour. Jack collected the following additional information for use in preparing the flexible budget variance for both systems: Actual number of surgeries performed = 950 Standard number of nursing hours allowed for each OR surgery = 5 Actual number of OR nursing hours used = 5,000 Actual OR nursing costs = 190,000 What does each of the calculated variances suggest to Jack regarding actions that he should or should not take with respect to investigating and improving each variance? Also, briefly explain why the variances differ between the two cost systems.arrow_forwardThe Two Cost Systems Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its two biggest nursing service linesthe Emergency Room (ER) and the Operating Room (OR). SHHs current cost system assigns total nursing costs to the ER and OR based on the number of patients serviced by each line. Total hospital annual nursing costs for these two lines are expected to equal 300,000. The table below shows expected patient volume for both lines. After discussion with several experienced nurses, Jack Bauer (SHHs accountant) decided that assigning nursing costs to the two service lines based on the number of times that nurses must check patients vital signs might more closely match the underlying use of costly hospital resources. Therefore, for comparative purposes, Jack decided to develop a second cost system that assigns total nursing costs to the ER and OR based on the number of times nurses check patients vital signs. This system is referred to as the vital-signs costing system. The earlier table also shows data for vital signs checks for lines. Calculate the amount of nursing costs that the vital-signs costing system assigns to the ER and to the OR.arrow_forwardThe Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital’s four patient service departments utilize the following amounts of space: Department A = 1,000 square feet Department B = 2,000 square feet Department C = 3,000 square feet Department D = 4,000 square feet Assuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to Department A?arrow_forward
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