Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 6, Problem 22E
To determine
Draw a graph of the cost behavior for each of the following costs incurred by Hospital M.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Novello Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room
is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating
room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be:
Disposable supplies
$350,100
Depreciation expense
63,100
Utilities
36,700
Nurse salaries
525,800
Technician wages
172,300
Total operating room overhead
$1,148,000
The overhead costs will be assigned to procedures based on the number of surgical room hours. Novello Medical Center expects to use the operating
room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs.
a. Compute the estimated number of operating room hours for the year.
hours
b. Determine the predetermined operating room overhead…
The housekeeping services department of Ruger Clinic, a multispecialty practice had $100,000 in direct costs this year. The patient services department generated $5,000,000 in patient revenue and the departments used a total of 5,000 total hours of housekeeping.The adult services department generated $3 million in patient revenue and used 1,500 housekeeping hours what is dollar allocation if patient services is used as the cost driver
The graph below shows monthly data collected on facilities maintenance department costs and on the number of patient-days serviced over the past
year.
50, 000
45,000
UneofBest FIE
40,000
35 000
30,000
25, 000
20,000
15,000
10,000
5000
1,000
2000
3.000
4,000
5,000
6,000
s of Patient-Days
Using 0 and 3,000 patient-days, the total cost at an activity level of 8,000 customer patient-days would be:
O a. $91,000
O b. $66,860
Oc. $63,360
O d. $55,000
Maintenance Department Costs
Chapter 6 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 6 - Describe the importance of cost behavior patterns...Ch. 6 - Define the following terms, and explain the...Ch. 6 - Suggest an appropriate activity base (or cost...Ch. 6 - Draw a simple graph of each of the following types...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Explain why a manufacturers cost of supervising...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Prob. 8RQCh. 6 - Indicate which of the following descriptions is...Ch. 6 - Prob. 10RQ
Ch. 6 - What is meant by a learning curve? Explain its...Ch. 6 - Suggest an appropriate independent variable to use...Ch. 6 - What is an outlier? List some possible causes of...Ch. 6 - Explain the cost estimation problem caused by...Ch. 6 - Describe the visual-fit method of cost estimation....Ch. 6 - What is the chief drawback of the high-low method...Ch. 6 - Explain the meaning of the term least squares in...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - List several possible cost drivers that could be...Ch. 6 - Prob. 21RQCh. 6 - Prob. 22ECh. 6 - The behavior of the annual maintenance and repair...Ch. 6 - WMEJ is an independent television station run by a...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - The Iowa City Veterinary Laboratory performs a...Ch. 6 - Chillicothe Meat Company produces one of the best...Ch. 6 - Rio Bus Tours has incurred the following bus...Ch. 6 - Prob. 31ECh. 6 - Prob. 32ECh. 6 - Prob. 33ECh. 6 - Gator Beach Marts, a chain of convenience grocery...Ch. 6 - For each of the cost items described below, choose...Ch. 6 - The following selected data were taken from the...Ch. 6 - Antioch Extraction, which mines ore in Montana,...Ch. 6 - Nations Capital Fitness, Inc. operates a chain of...Ch. 6 - The Allegheny School of Music has hired you as a...Ch. 6 - Prob. 40PCh. 6 - (Note: Instructors who wish to cover all three...Ch. 6 - Refer to the original data in the preceding...Ch. 6 - Shortly after being hired as an analyst with...Ch. 6 - The controller of Chittenango Chain Company...Ch. 6 - Dana Rand owns a catering company that prepares...Ch. 6 - Prob. 48PCh. 6 - Earth and Artistry, Inc. provides commercial...Ch. 6 - Prob. 51CCh. 6 - Refer to the data and accompanying information in...
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
- Falls Creek Community Health Clinic uses the high-low method to analyze cost behavior and has determined that number of patients treated predict the clinic's total treatment costs. Determine the cost function (formula) for total treatment costs. What will the estimated treatment cost be if Falls Creek treats 1,402 patients in a month? Total Number Treatment of Patients Costs January $3,410 February $3,790 $3,574 $3,730 $4,500 1060 1180 March 1030 April 1260 May 1310 $4,294 June 1430 (Round your final answer to two decimal places)arrow_forwardShady Rest Nursing Home has 100 private pay residents. The administrator is concerned about balancing the ratio its private pay to non-private pay patients. Non-private pay sources reimburse an average of $100 per day whereas private pay residents pay average 100 percent of full daily charges. The administrator estimates that variable cost per resident per day is $25 for supplies, food, and contracted services and annual fixed costs are $4,562,500. What is the daily contribution margin of each non-private pay resident? If 25 percent of the residents are non-private pay, what will shady Rest charge the private pay patients in order to break even? What if non-private pay payors cover 50 percent of the residents?arrow_forwardHealth-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 28,000 hours next year. Health-Temp charges the hospitals and clinics $80 per hour and has variable costs of $67.20 per hour (this includes the payment to the nurse). Total fixed costs equal $345,984. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places. Contribution margin per unit $_____ Contribution margin ratio ______ 2. Calculate the sales revenue needed to break even.$______ 3. Calculate the sales revenue needed to achieve a target profit of $79,360.$______ 4. What if Health-Temp had target operating income (profit) of $97,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3? LARGER By how…arrow_forward
- Selected financial data for the Micco Community Health Clinic follows for a volume of 120,000 patients. Total Fixed Costs $304,144 Total costs (fixed and variable) $464,620 Calculate the variable cost per patient. (input your number without dollar signs or commas. Use 2 decimal places.)arrow_forwardHealth-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 22,500 hours next year. Health-Temp charges the hospitals and clinics $120 per hour and has variable costs of $97.20 per hour (this includes the payment to the nurse). Total fixed costs equal $494,076. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places. Contribution margin per unit $____ Contribution margin ratio ______ 2. Calculate the sales revenue needed to break even.$_____ 3. Calculate the sales revenue needed to achieve a target profit of $141,360.$______ 4. What if Health-Temp had target operating income (profit) of $173,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3? By how…arrow_forwardRegis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $2,172,240 per year and the facility (which operates monthly at capacity) has a total of 60 beds available. (Assume a 360-day year.) The facility’s accountant is considering a new overhead allocation method using the following information: Rooms are cleaned daily; laundry for rooms is done, on average, every other day. d. Assume a patient stayed at Regis Place for six days. The patient was in a single room and required six hours of nursing care and 30 hours of physical therapy. 1. What overhead cost would be assigned to this patient under the current method of overhead allocation? $______ 2. What overhead cost would be assigned to this patient under the ABC method of overhead allocation? Rooms $ Laundry $ Nursing care $ Physical therapy $ General services $ Total $arrow_forward
- For a table manufacturing company, selling price for a table is $22.00 per Unit, Variable cost is $6.00 per Unit, labor charge is $1.00 per Unit, rent is $ 515.00 per month and transportation is $1 per tables. If 337.00 tables are sold in a month how much revenue company earns for that month? 2:You run a hospital with 100 rooms. Fixed daily cost is $818.00 which includes staff salary, property charges, maintenance etc. Variable cost per room is $12.00 which includes cleaning, equipment rentals, utility cost etc. which is incurred only when the room is full. You charge $58.00 per room per day. You sold 31.00 rooms today, how much profit/loss did you earn for today.arrow_forwardCompute for the total cost per month using costing labor cost by the given data Compute for the percentage weight of the monetary benefit, non monetary benefit, and deferred monetary benefit Compute for the percentage of cost relevant to the sales of total labor cost, given that there are 40 employees in the company and the revenue of the company is 2,500,000 monthly.arrow_forwardCountryside Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing ($2.55 per teller transaction), check processing (50.10 per canceled check), and ATM transaction processing (50.20 per ATM transaction). Rosa Bush had 5 teller transactions, 10 canceled checks, and 7 ATM transactions during the month. What is the total monthly activity-based cost for Rosa Bush during the month? a $32.90 O b. $15.15 $9.75 4 $24.75arrow_forward
- The manager of Trusty Car Inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections. Requirements 1. Use the high-low method to calculate the variable cost per inspection. 2. Calculate the total fixed costs. 3. Write the equation and calculate the operating costs for 1,000 inspections. 4. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.arrow_forwardThe Hospital La Salud forthe following data on electricity costs and the number of patients per month of the last year for you to develop a cost function. Electricity costs $5,500 5,800 Patients 1,836 2,100 2,914 1,258 1,025 1,416 2,965 2,692 1,038 Months January Feb 6,200 4,325 4,025 4,445 6,500 5,890 3,900 3,700 3,990 4,998 Sea April May Jun Jul Aug Setp Oct 950 Nov 1,100 Dec 1,564 Requirements: 1. Using the High Low Method determine the FIXED COST AND VARIABLE COST 2. EXPRESS THE COST FUNCTION SUPPOSE FOR THE FIRST TRIMESTRE OF THE ANUS, YOU HAVE PROJECTED THE FOLLOWING NUMBERS OF PATIENTS: January 2,985/ Feb 3,250/ March 4,950 Present the total cost for each projected month. 3. 4. Present the above using the DATA ANALYSIS TOOL in EXELarrow_forwardLising Therapy has a physical therapist who performs electro-mechanical treatments for its patients. During April, Lising had the following cost and output information: Required: 1. Calculate the cost per treatment for April. 2. Calculate the cost of services sold for April. 3. What if Lising found a way to reduce overhead costs by 20 percent? How would this affect the profit per treatment?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning