The California Community Hospital has two service departments, Cafeteria and Housekeeping, and two operating departmentsSurgery and Outpatient. The hospital uses the direct method to allocate service department costs to operating departments. Itallocates Cafeteria costs based on the number of employees.Outpatient$360,00045,000CafeteriaHousekeeping$10,00015,000Surgery$140,00015,000TotalDepartmental costs before allocationNumber of employees$40,00020,000$550,000Knowledge Check 01How much Cafeteria cost should be allocated to the Surgery department?$6,316$8,000$30,000O $10,000

Cafeteria and Housekeeping are service departments. So their cost will be allocated to operating…

The California Community Hospital has two service departments, Cafeteria and Housekeeping, and two operating departments Surgery and Outpatient. The hospital uses the direct method to allocate service department costs to operating departments. It allocates Cafeteria costs based on the number of employees. Cafeteria $40,000 20,000 Housekeeping $10,000 Outpatient $360,000 45,000 Total Departmental costs before allocation Number of employees Surgery $140,000 15,000 $550,000 15,000 Knowledge Check 01 How much Cafeteria cost should be allocated to the Surgery department? O $6,316 O $8,000 $30,000 O $10.000

The California Community Hospital has two service departments, Cafeteria and Housekeeping, and two operating departments Surgery and Outpatient. The hospital uses the direct method to allocate service department costs to operating departments. It allocates Cafeteria costs based on the number of employees. Cafeteria $40,000 20,000 Housekeeping $10,000 Outpatient $360,000 45,000 Total Departmental costs before allocation Number of employees Surgery $140,000 15,000 $550,000 15,000 Knowledge Check 01 How much Cafeteria cost should be allocated to the Surgery department? O $6,316 O $8,000 $30,000 O $10.000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 2MTC: The Two Cost Systems Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which...

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The Two Cost Systems Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its two biggest nursing service linesthe Emergency Room (ER) and the Operating Room (OR). SHHs current cost system assigns total nursing costs to the ER and OR based on the number of patients serviced by each line. Total hospital annual nursing costs for these two lines are expected to equal 300,000. The table below shows expected patient volume for both lines. Calculate the amount of nursing costs that the current cost system assigns to the ER and to the OR.
The Two Cost Systems Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its two biggest nursing service linesthe Emergency Room (ER) and the Operating Room (OR). SHHs current cost system assigns total nursing costs to the ER and OR based on the number of patients serviced by each line. Total hospital annual nursing costs for these two lines are expected to equal 300,000. The table below shows expected patient volume for both lines. After discussion with several experienced nurses, Jack Bauer (SHHs accountant) decided that assigning nursing costs to the two service lines based on the number of times that nurses must check patients vital signs might more closely match the underlying use of costly hospital resources. Therefore, for comparative purposes, Jack decided to develop a second cost system that assigns total nursing costs to the ER and OR based on the number of times nurses check patients vital signs. This system is referred to as the vital-signs costing system. The earlier table also shows data for vital signs checks for lines. Calculate the amount of nursing costs that the vital-signs costing system assigns to the ER and to the OR.
Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its two biggest nursing service linesthe Emergency Room (ER) and the Operating Room (OR). SHHs current cost system assigns total nursing costs to the ER and OR based on the number of patients serviced by each line. Total hospital annual nursing costs for these two lines are expected to equal 300,000. The table below shows expected patient volume for both lines. After discussion with several experienced nurses, Jack Bauer (SHHs accountant) decided that assigning nursing costs to the two service lines based on the number of times that nurses must check patients vital signs might more closely match the underlying use of costly hospital resources. Therefore, for comparative purposes, Jack decided to develop a second cost system that assigns total nursing costs to the ER and OR based on the number of times nurses check patients vital signs. This system is referred to as the vital-signs costing system. The earlier table also shows data for vital signs checks for lines. In an effort to better plan for and control OR costs, SHH management asked Jack to calculate the flexible budget variance (i.e., flexible budget costs - actual costs) for OR nursing costs, including the price variance and efficiency variance. Given that Jack is interested in comparing the reported costs of both systems, he decided to prepare the requested OR variance analysis for both the current cost system and the vital-signs costing system. In addition, Jack chose to use each cost systems estimate of the cost per OR nursing hour as the standard cost per OR nursing hour. Jack collected the following additional information for use in preparing the flexible budget variance for both systems: Actual number of surgeries performed = 950 Standard number of nursing hours allowed for each OR surgery = 5 Actual number of OR nursing hours used = 5,000 Actual OR nursing costs = 190,000 What does each of the calculated variances suggest to Jack regarding actions that he should or should not take with respect to investigating and improving each variance? Also, briefly explain why the variances differ between the two cost systems.
Yellville Regional Hospital is a small hospital with two service departments and three revenue areas: Service Department Direct Costs Square Feet Laundry Pounds Housekeeping (HK) $ 80,000 - 16,000 Laundry $ 132,000 500 - Revenue Areas: Surgery $ 400,000 1,500 48,000 Semiprivate rooms $ 200,000 2,000 24,000 Maternity $ 150,000 1,000 12,000 The hospital wants to allocate the service department costs to the revenue areas. Housekeeping is allocated based on square footage; Laundry is allocated based on pounds of laundry. The normal capacity for Surgery is 200 hours per month; normal capacity for semiprivate rooms is 600 patient days; and normal capacity for maternity is 200 patient days.Required:Determine the overhead rate for the three revenue areas. Allocate the service department costs to the revenue…
A Community Hospital has two (2) service departments: Maintenance and Food Services. The hospital has three (3) patient care units, namely: General Medicine, OB, and Surgery. Additional information are as follows: Amount of cost to be allocated: Maintenance P 8,000,000 Food Services P 3,000,000 Allocation method: Maintenance Costs are allocated based on square foot assigned to the Food Service Costs are allocated based on number of meals served to the EXPECTED UTILIZATION RATES SQ. FT. Meals Served Food Services 10,000 30,000 Maintenance 10,000 10,000 Surgery 20,000 40,000 OB 30,000 30,000 General Medicine 30,000 90,000 TOTAL 100,000 200,000 Using the information, allocate the costs of the two (2) service departments with the three (3) patient care units using: Direct Method, Step Method – Maintenance First, Step Method – Food Services First, and Reciprocal Method.
The Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital’s four patient service departments utilize the following amounts of space: Department A = 1,000 square feet Department B = 2,000 square feet Department C = 3,000 square feet Department D = 4,000 square feet Assuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to Department A?
The Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital's four patient service departments utilize the following amounts of space:Department A = 1,000 square feetDepartment B = 2,000 square feetDepartment C = 3,000 square feetDepartment D = 4,000 square feet Assuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to each department? Show all work. ....typing only
2.A hospital has the following cost and utilization information Overhead cost: Maintenance costs: $250,000 Cost centers: Ward: $50,000; Coronary care Unit $100,000 Utilization: Ward treats 100 patients; Coronary care unit treats 50 patients A. . What is the average cost of the Ward and Coronary care unit, ignoring overhead costs? B. If you were to allocate overhead costs to the Ward and the coronary care unit, what share would you allocate to each? Explain. C. If the Ward has 2,000 square feet of space and the coronary care unit at 10,000 square feet, calculate average costs for each unit including the appropriate allocation of overhead costs to each.
Part (two). The following information relates to the wards in the cardiology department of Good Health Hospital for one accounting period Wards 1 2 3 Number of Beds 12 10 20 Total number of Patients 48 32 108 Total ward staff (excluding consultants) 8 8 12 Ward staff – full-time equivalent 5 4 6 Variable operating costs for period £58,000 £66,000 £98,000 Operating fixed costs £85,000 £67,000 £88,000 General overhead costs £40,000 £40,000 £40,000 General overhead costs are made up of recharges from support services. The total cost of £120,000 is split equally between the three wards. The hospital manager is concerned about the high costs of running the three heart-care wards. She has asked you to investigate their performance. Question Write a report which investigates the costs of operating the three hospital wards. Your report should include appropriate measures of performance for each ward and you…
Parker Company has two service departments, Cafeteria and Engineering, and two operating departments. The number of employees in each department is given below: Cafeteria 10 Engineering 40 Operating Department 1 500 Operating Department 2 200 The company uses the step method to allocate service department cost. Cafeteria is allocated first, and then Engineering. The costs of the Cafeteria are allocated to other departments on the basis of number of employees in the departments. If Cafeteria costs are budgeted at R69 375, the amount of cost allocated to Operating Department 2 would be closest to: A. R18 500 B. R18 750 C. R19 821 D. R46 875
The administrator of Azalea Hills Hospital would like a cost formula linking the administrative costsinvolved in admitting patients to the number of patients admitted during a month. The Admitting Department’s costs and the number of patients admitted during the immediately preceding eight months are givenin the following table:Number of AdmittingMonth Patients Admitted Department CostsMay ........................... 1,800 $14,700June .......................... 1,900 $15,200July ........................... 1,700 $13,700August ....................... 1,600 $14,000September ................ 1,500 $14,300October ..................... 1,300 $13,100November ................ 1,100 $12,800December ................. 1,500 $14,600Required:1. Use the high-low method to estimate the fixed and variable components of admitting costs.2. Express the fixed and variable components of admitting costs as a cost formula in the formY a bX .
Etobicoke Specialty Clinic (ESC) has two patient services departments: Medicine and Surgery. The patient services departments are supported by the Housekeeping, Financial Services, and Administration departments. The Finance Section of ESC has compiled the following information: Department Direct Costs Square Feet #of Employees Housekeeping $200,000 3,000 500 Administration $400,000 5,000 250 Financial Services $300,000 2,000 100 Medicine $1,000,000 53,000 2,600 Surgery $1,500,000 40,000 2,300 The ESC has determined that the cost driver for the Housekeeping Department is square feet and that the cost driver for Administration and Financial Services is the number of employees. using the step-down method of cost allocation, Calculate the allocation of the Administration department’s costs to the Financial Services, Medicine, and Surgery departments. Assume Housekeeping costs are allocated…