Managerial Accounting, Loose-leaf Version
14th Edition
ISBN: 9781337270717
Author: WARREN, Carl S.; Reeve, James M.; Duchac, Jonathan
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 1, Problem 3PA
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
partial list of Foothills Medical Center’s costs follows:a. Cost of laundry services for operating room personnelb. Salary of intensive care personnelc. Depreciation on patient roomsd. Cost of blood testse. Nurses’ salariesf. Cost of patient mealsg. Overtime incurred in the Patient Records Department due to a computerfailureh. Operating room supplies used on patients (catheters, sutures, etc.)i. Doctor’s feej. Cost of X-ray testk. Cost of maintaining the staff and visitors’ cafeterial. Cost of drugs used for patientsm. Cost of intravenous solutions used for patientsn. Cost of improvements on the employee parking loto. Salary of the nutritionistp. General maintenance of the hospitalq. Cost of advertising hospital services on televisionr. Cost of new heart wings. Training costs for nursest. Depreciation of X-ray equipmentu. Utility costs of the hospital
Instructions1. What would be Foothills Medical Center’s most logical definition for the final cost object? Explain.2. Identify whether…
Standard costs are divided into which of the following components?
A. price standard and quantity standard
B. quality standard and quantity standard
C. variance standard and quantity standard
D. materials standard and labor standard
Which of the following activity bases would be the most appropriate for food costs of a hospital?
A. how many MRI's are taken
B. number of patients who stay in the hospital
C. quantity of prescriptions filled
D. number of nurses scheduled to work
To calculate income from operations, total service department charges are
A. subtracted from operating expenses
B. subtracted from income from operations before service department charges
C. subtracted from gross profit margin
D. added to income from operations before service department charges
Question 1.
The Rye Village Clinic provides primary health care to local residents. For costing purposes, the clinic
classifies its departments into three operating departments (Clinic, Radiology, and Laboratory) and three
support departments (Administration, Housekeeping, and Medical Records). The allocation of
Administration costs is based on the percentage of time spent in the department. The allocation of
Housekeeping costs is based on floor space. The allocation of Medical Records cost is based on the
number of entries to patient files. For the first week of May, the department managers report the
following data:
House- Medical
Admin. keeping Records Clinic Radiology Lab. Total
Total costs
250
50
200
800
500
400
2,200
Time spent
[percentage]
10
10
20
30
20
10
100
Floor space
[square feet)
3,000 2,000 14,000
1,000
500
2,500 5,000
Entries to
patient files
500 1,500 4,500
500 2,000
Required:
(a) Allocate the three support department costs to the three operating departments using the…
Chapter 1 Solutions
Managerial Accounting, Loose-leaf Version
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - What manufacturing cost term is used to describe...Ch. 1 - Distinguish between prime costs and conversion...Ch. 1 - What is the difference between a product cost and...Ch. 1 - Name the three inventory accounts for a...Ch. 1 - In what order should the three inventories of a...Ch. 1 - What are the three categories of manufacturing...Ch. 1 - Prob. 9DQCh. 1 - How does the Cost of goods sold section of the...
Ch. 1 - Management process Three phases of the management...Ch. 1 - Prob. 2BECh. 1 - Prime and conversion costs Identify the following...Ch. 1 - Product and period costs Identify the following...Ch. 1 - Cost of goods sold, cost of goods manufactured...Ch. 1 - Prob. 1ECh. 1 - Prob. 2ECh. 1 - Prob. 3ECh. 1 - Prob. 4ECh. 1 - Concepts and terminology From the choices...Ch. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Classifying costs The following is a manufacturing...Ch. 1 - Prob. 10ECh. 1 - Manufacturing company balance sheet Partial...Ch. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Income statement for a manufacturing company Two...Ch. 1 - Statement of cost of goods manufactured for a...Ch. 1 - Cost of goods sold, profit margin, and net income...Ch. 1 - Cost flow relationships The following information...Ch. 1 - Classifying costs The following is a list of costs...Ch. 1 - Prob. 2PACh. 1 - Cost classifications for a service company A...Ch. 1 - Manufacturing income statement, statement of cost...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Prob. 1PBCh. 1 - Classifying costs The following is a list of costs...Ch. 1 - Prob. 3PBCh. 1 - Several items are omitted from the income...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Prob. 1ADMCh. 1 - Comparing occupancy for two hotels Sunrise Suites...Ch. 1 - Prob. 3ADMCh. 1 - Prob. 4ADMCh. 1 - Prob. 1TIFCh. 1 - Communication Todd Johnson is the Vice President...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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 cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the 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…arrow_forwardActivity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:arrow_forwardIdentifying Direct and Indirect Costs 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 anarrow_forward
- Zamboanga Hospital plans to use the activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: (Refer to image) Determine the activity cost associated with Patient 2. a. P1,388 b. P 908 c. P1,816 d. P4,555arrow_forwardWhat 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?arrow_forwardUnk The costs of the Accounting Department at Central Hospital would be considered by the Surgery Department to be: A. a) direct costs. B. b) indirect costs. C. c) incremental costs. D. d) opportunity costs. E. e) sunk costs.arrow_forward
- Formation of an Activity Dictionary A hospital is in the process of implementing an ABC system. A pilot study is being done to assess the effects of the costing changes on specific products. Of particular interest is the cost of caring for patients who receive in-patient recovery treatment for illness, surgery (noncardiac), and injury. These patients are housed on the third and fourth floors of the hospital. The floors are dedicated to patient care and have only nursing stations and patient rooms. A partial transcript of an interview with the hospitals nursing supervisor is as follows: 1. How many nurses are in the hospital? There are 101 nurses, including me. 2. Of these 100 nurses, how many are assigned to the third and fourth floors? Fifty nurses are assigned to these two floors. 3. What do these nurses do (please describe)? Provide nursing care for patients, which, as you know, means answering questions, changing bandages, administering medicine, changing clothes, etc. 4. And what do you do? I supervise and coordinate all the nursing activity in the hospital. This includes surgery, maternity, the emergency room, and the two floors you mentioned. 5. What other lodging and care activities are done for the third and fourth floors by persons other than the nurses? The patients must be fed. The hospital cafeteria delivers meals. The laundry department picks up dirty clothing and bedding once each shift. The floors also have a physical therapist assigned to provide care on a physician-directed basis. 6. Do patients use any equipment? Yes. Mostly monitoring equipment. 7. Who or what uses the activity output? Patients. But there are different kinds of patients. On these two floors, we classify patients into three categories according to severity: intensive care, intermediate care, and normal care. The more severe the illness, the more activity is used. Nurses spend much more time with intermediate care patients than with normal care. The more severe patients tend to use more of the laundry service as well. Their clothing and bedding need to be changed more frequently. On the other hand, severe patients use less food. They eat fewer meals. Typically, we measure each patient type by the number of days of hospital stay. And you have to realize that the same patient contributes to each type of product. Required: Prepare an activity dictionary with three categories: activity name, activity description, and activity driver.arrow_forwardRefer to Exhibit 3–12, which portrays the three types of allocation procedures used in two-stage allocation. Give an example of each of these allocation procedures in a hospital setting. The ultimate cost object is a patient-day of hospital care. This is one day of care for one patient. (Hint: First think about the various departments in a hospital. Which departments deal directly with patients; which ones are service departments and do not deal directly with patients? What kinds of costs does a hospital incur that should be distributed among all of the hospital’s departments? Correct hospital terminology is not important here. Focus on the concepts of cost allocation portrayed in Exhibit 3–12.)arrow_forwardComprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3 to 1 ratio of direct service staff to residents to maintain the licensure associated with the Nursing Home beds. The salary expense associated with direct service staff for the Comprehensive Care Nursing Home would most likely be classified as: 1. Variable cost. 2. Fixed cost. 3. Overhead costs. 4. Inventoriable costs.arrow_forward
- Pareto chart and cost of quality report for a service company The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Patient registration $ 6,500 Verifying patient information 9,700 Assigning patients 13,000 Searching/waiting for doctor 9,200 Doctor exam 4,900 Waiting for transport 17,500 Transporting patients 16,200 Verifying lab orders 14,500 Searching for equipment 8,200 Incorrect labs 11,300 Lab tests 17,000 Counting supplies 19,000 Looking for supplies 8,200 Staff training 4,800 Total $160,000 a. b. c. d. Classify the…arrow_forwardNorthwest Hospital is a full-service hospital that provides everything from major surgery and emergency i clinics. Required: For each of the following costs incurred at Northwest Hospital, indicate whether it would most likely be a of the specified cost object. Cost Cost Object Direct Cost or Indirect Cost Example: Catered food served to patients A particular patient Direct Cost 1. The wages of pediatric nurses The pediatric department 2. Prescription drugs 3. Heating the hospital A particular patient The pediatric department The pediatric department A particular pediatric patient 4. The salary of the head of pediatrics 5. The salary of the head of pediatrics 6. Hospital chaplain's salary A particular patient A particular patient A particular department 7. Lab tests by outside contractor 8. Lab tests by outside contractorarrow_forwardA. Service costing is a costing method used to compute the costs of services rendered.Provide the most suitable basis to calculate the cost for the following services:i) Audit ii) Hotel iii) Hospitalarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License