Posted: July 20th, 2016

Example of Indirect Costs Allocated to Radiology Departments, ” and review the chapter text describing how the indirect cost is allocated.

Note tables 6-1 & 6-2 are attached. Please use this to answer the homework questions Study Table 6-1, “Example of Radiology Departments Direct and Indirect Cost Totals,” and Table 6-2, “Example of Indirect Costs Allocated to Radiology Departments, ” and review the chapter text describing how the indirect cost is allocated. The assignment will change the allocation bases: A) Volumes, B) Direct Costs, C) Number of Films

Question # 1: Required:

1) Compute he costs allocated to cost centers #557, 558, 559, 560. and 561 using the new allocation bases shown below. Use a worksheet replicating the setup in Table 6-2. Total the new results. The new allocation bases are: A)Volumes 120,000 130,000 70,000 110,000 70,000 500,000 B) Direct costs 1,100,000 700,000 1,300,000 1,600,000 1,300,000 6,000,000

C) No of films 400,000 20,000 55,000 25,000 20,000 520,000

Question #2: Choose between the physican’s practice in Mini-Case Study 2 or the clinic in Mini-Case Study 3. Designate the responsibility centers and the support centers for the organization selected. Prepare a rational for the structure you have designed.