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In: Finance

David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate...

David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below to answer problem 2. Show your calculations.

Square Footage

Direct

Expenses

Lab Tests

Utilities

$      200,000

Administration

2,000

500,000

Laboratory

2,000

625,000

Day-op Suite

3,000

1,400,000

4,000

Cystoscopy

1,500

300,000

500

Endoscopy

1,500

600,000

500

Total

10,000

$   3,375,000

5,000

What are the Cystoscopy Department’s total expenses?

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Expert Solution

jeff jeffy answered 1 year ago
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