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Raynham's Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The vice president of finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technol- ogy. Can't we have state-of-the-art accounting technology?" Raynham's Radiology Center Budgeted Information for the Year Ended May 31, 2017 X-rays Ultrasound CT Scan $101,000 MRI Total Technician labor Depreciation $155,000 $ 103,000 $ 421,000 $ 62,000 42,240 22,600 256,000 424,960 23,600 876,800 31,500 1,600,000 94,100 20,000 250,000 252,500 151,100 $2,788,700 Materials 16,400 Administration Maintenance Sanitation Utilities $126,840 3,842 $373,400 4,352 $603,560 $1,011,300 2,924 15 Number of procedures Minutes to clean after each procedure Minutes for each procedure 2,482 35 15 25 40 RRC operates at capacity. The proposed allocation bases for overhead are: Number of procedures Administration Maintenance (including parts) Capital cost of the equipment (use Depreciation) Total cleaning minutes Total procedure minutes Sanitation Utilities

Raynham's Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The vice president of finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technol- ogy. Can't we have state-of-the-art accounting technology?" Raynham's Radiology Center Budgeted Information for the Year Ended May 31, 2017 X-rays Ultrasound CT Scan $101,000 MRI Total Technician labor Depreciation $155,000 $ 103,000 $ 421,000 $ 62,000 42,240 22,600 256,000 424,960 23,600 876,800 31,500 1,600,000 94,100 20,000 250,000 252,500 151,100 $2,788,700 Materials 16,400 Administration Maintenance Sanitation Utilities $126,840 3,842 $373,400 4,352 $603,560 $1,011,300 2,924 15 Number of procedures Minutes to clean after each procedure Minutes for each procedure 2,482 35 15 25 40 RRC operates at capacity. The proposed allocation bases for overhead are: Number of procedures Administration Maintenance (including parts) Capital cost of the equipment (use Depreciation) Total cleaning minutes Total procedure minutes Sanitation Utilities

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Q.Calculate the budgeted cost per service of X-rays, ultrasounds, CT scans, and MRI if RRC allocated overhead costs using activity-based costing.

Raynham's Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The vice president of finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technol- ogy. Can't we have state-of-the-art accounting technology?" Raynham's Radiology Center Budgeted Information for the Year Ended May 31, 2017 X-rays Ultrasound CT Scan $101,000 MRI Total Technician labor Depreciation $155,000 $ 103,000 $ 421,000 $ 62,000 42,240 22,600 256,000 424,960 23,600 876,800 31,500 1,600,000 94,100 20,000 250,000 252,500 151,100 $2,788,700 Materials 16,400 Administration Maintenance Sanitation Utilities $126,840 3,842 $373,400 4,352 $603,560 $1,011,300 2,924 15 Number of procedures Minutes to clean after each procedure Minutes for each procedure 2,482 35 15 25 40 RRC operates at capacity. The proposed allocation bases for overhead are: Number of procedures Administration Maintenance (including parts) Capital cost of the equipment (use Depreciation) Total cleaning minutes Total procedure minutes Sanitation Utilities
Transcribed Image Text:Raynham's Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology center in the state. RRC has achieved this status because it constantly reexamines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The vice president of finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technol- ogy. Can't we have state-of-the-art accounting technology?" Raynham's Radiology Center Budgeted Information for the Year Ended May 31, 2017 X-rays Ultrasound CT Scan $101,000 MRI Total Technician labor Depreciation $155,000 $ 103,000 $ 421,000 $ 62,000 42,240 22,600 256,000 424,960 23,600 876,800 31,500 1,600,000 94,100 20,000 250,000 252,500 151,100 $2,788,700 Materials 16,400 Administration Maintenance Sanitation Utilities $126,840 3,842 $373,400 4,352 $603,560 $1,011,300 2,924 15 Number of procedures Minutes to clean after each procedure Minutes for each procedure 2,482 35 15 25 40 RRC operates at capacity. The proposed allocation bases for overhead are: Number of procedures Administration Maintenance (including parts) Capital cost of the equipment (use Depreciation) Total cleaning minutes Total procedure minutes Sanitation Utilities
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