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Category > Accounting Posted 19 Aug 2017 My Price 9.00

Alva Community Hospital

Exercise 3-22    Classifying Costs as Fixed and Variable in a Service  Organization

Alva Community Hospital has five laboratory technicians who are responsible for doing a series of standard blood tests. Each technician is paid a salary of $30,000. The lab facility represents a recent addition to the hospital and cost $300,000. It is expected to last 20 years. Equipment used for the testing cost $10,000 and has a life expectancy of 5 years. In addition to the salaries, facility, and equipment, Alva expects to spend $200,000  for  chemicals,  forms,  power, and other supplies. This $200,000 is enough for 200,000 blood tests.

Required:

Assuming that the driver (measure of output) for each type of cost is the number of blood tests run, classify the costs by completing the following table. Put an X in the appropriate box for variable cost, discretionary fixed cost, or committed fixed cost.

 

 

 

 

Cost Category

Technician salaries Laboratory facility Laboratory equipment Chemicals and other supplies

Variable Cost

Discretionary Fixed Cost

Committed Fixed Cost

 

 

Text Box: Use the following information for Exercises 3-23 and 3-24: Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following formula: Maintenance Cost ¼ $1,750,000 þ $125X, where X ¼ Number of Heart Stents. Last year, Alisha produced 50,000 stents. Actual maintenance costs for the year were as expected. (Note: Round all answers to two decimal places.)

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Maurice Tutor
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Status NEW Posted 19 Aug 2017 01:08 PM My Price 9.00

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