The Fixed Costs of Operating the Maintenance Facility of General

question 122

Essay

The fixed costs of operating the maintenance facility of General Hospital are $4,500,000 annually.Variable costs are incurred at the rate of $30 per maintenance-hour.The facility averages 40,000 maintenance-hours a year.Budgeted and actual hours per user for 20X3 are as follows:
$\begin{array}{lrr}&\text { Budgeted hours }&\text { Actual hours }\\\text { Building and grounds } & 10,000 & 12,000 \\\text { Operating and emergency } & 8,000 & 8,000 \\\text { Patient care } & 21,000 & 22,000 \\\text { Administration } & 1,000 & 1,200 \\\text { Total } & 40,000 & 43,200\end{array}$ Assume that budgeted maintenance-hours are used to calculate the allocation rates.
Required:
a.If a single-rate cost-allocation method is used,what amount of maintenance cost will be budgeted for each department?
b.If a single-rate cost-allocation method is used,what amount of maintenance cost will be allocated to each department based on actual usage?
c.If a dual-rate cost-allocation method is used,what amount of maintenance cost will be budgeted for each department?
d.If a dual-rate cost-allocation method is used,what amount of maintenance cost will be allocated to each department based on actual usage? Based on budgeted usage for fixed operating costs and actual usage for variable operating costs?

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Definitions:

Effect Size

A measure used in statistics to quantify the magnitude of a phenomenon or the difference between two groups.

Utility Variables

Variables used in decision-making or modeling that represent the usefulness or value of different options or outcomes to stakeholders.

Utility

The concept of utility refers to the total satisfaction or benefit that a consumer receives from consuming a good or service.

ROI

Return on Investment, a measure used to evaluate the efficiency or profitability of an investment.