Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 16, Problem 16.3APR
Cost classifications for a service company
A partial list of Foothills Medical Center’s costs follows:
- A. Cost of patient meals
- B. Nurses' salaries
- C.
Depreciation of X-ray equipment - D. Utility costs of the hospital
- E. Salary of intensive care personnel
- F. Cost of X-ray test
- G. Operating room supplies used on patients (catheters, sutures, etc.)
- H. Salary of the nutritionist
- I. General maintenance of the hospital
- J. Cost of new heart wing
- K. Cost of drugs used for patients
- L. Cost of advertising hospital services on television
- M. Cost of improvements on the employee parking lot
- N. Cost of intravenous solutions used for patients
- O. Training costs for nurses
- P. Cost of laundry services for operating room personnel
- Q. Doctor's fee
- R. Overtime incurred in the Patient Records Department due to a computer failure
- S. Cost of blood tests
- T. Cost of maintaining the staff and visitors' cafeteria
- U. Depreciation on patient rooms
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.
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Projected Revenues by Patient Services Department
Routine Care
Laboratory
Radiology
Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost
driver for general administration and financial services is patient services revenue, while the
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patient services departments.
Total revenues
Projected Costs for All Departments
Patient Services Departments (Direct Costs):
Routine Care
Laboratory
Radiology
Total costs
Support Services Departments (Overhead Costs):
Financial Services
Facilities
Housekeeping
General Administration
Human Resources
Total overhead costs
Total costs of both patient and support services
Projected profit
EXHIBIT 6.7
Kensington Hospital: Final Allocations
Support Department
(allocation rate)
Financial Services ($0.05556)
Facilities
Housekeeping…
Which of the following activity bases would be the most appropriate for food costs of a hospital?
a.quantity of prescriptions filled
b.how many MRI's are taken
c.number of nurses scheduled to work
d.number of patients who stay in the hospital
What types of overhead costs are considered in job costing for hospitals, and how are they allocated to patients or procedures?A. Facility Costs - Rent, property taxes, utilities
B. Administrative Costs - Salaries of administrative staff, office supplies, software systems, and legal fees
C. Medical supplies and Equipment - Overhead costs also cover the expenses incurred in maintaining and replenishing medical supplies, equipment, and instruments used throughout the hospital.
Can you think of any other overhead costs that may be considered when a hospital is determining the cost of a procedure?
Chapter 16 Solutions
Financial & Managerial Accounting
Ch. 16 - What are the major differentes between managerial...Ch. 16 - A. Differentiate between a department with line...Ch. 16 - What manufacturing cost term is used to describe...Ch. 16 - Prob. 4DQCh. 16 - What is the difference between a product cost and...Ch. 16 - Name the three inventory accounts for a...Ch. 16 - In What order should the three inventories of a...Ch. 16 - Prob. 8DQCh. 16 - For a manufacturer, what is the description of the...Ch. 16 - How does the Cost of Goods Sold section of the...
Ch. 16 - Prob. 16.1APECh. 16 - Management process Three phases of the management...Ch. 16 - Prob. 16.2APECh. 16 - Prob. 16.2BPECh. 16 - Prob. 16.3APECh. 16 - Prime and conversion costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Prob. 16.5APECh. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Prob. 16.3EXCh. 16 - Classifying costs as product or period costs For...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Prob. 16.7EXCh. 16 - Classifying costs The following report was...Ch. 16 - Financial statements of a manufacturing firm The...Ch. 16 - Manufacturing company balance sheet Partial...Ch. 16 - Cost of direct materials used in production for a...Ch. 16 - Prob. 16.12EXCh. 16 - Prob. 16.13EXCh. 16 - Income statement for a manufacturing company Two...Ch. 16 - Statement of cost of goods manufactured for a...Ch. 16 - Prob. 16.16EXCh. 16 - Cost flow relationships The following information...Ch. 16 - Prob. 16.18EXCh. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Prob. 16.1BPRCh. 16 - Classifying costs The following is a list of costs...Ch. 16 - Prob. 16.3BPRCh. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Prob. 16.5BPRCh. 16 - Prob. 16.1CPCh. 16 - Prob. 16.2CPCh. 16 - Managerial accounting in the management process...Ch. 16 - Prob. 16.4CPCh. 16 - Using managerial accounting information The...
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