Question

The following budgeted information is available:                          
                          
   X-Rays   Ultrasound   CT Scan   MRI   Total      
Technician Labour   $61,440   $105,600   $96,000   $105,000   $368,040      
Depreciation   $32,240   $268,000   $439,000   $897,500   $1,636,740      
Materials   $22,080   $16,500   $24,000   $31,250   $93,830      
Administration                   $20,610      
Maintenance                   $247,320      
Sanitation                   $196,180      
Utilities                   $134,350      
Totals   $115,760   $390,100   $559,000   $1,033,750   $2,697,070      
                          
Number of Procedures   3,840   4,400   3,000   2,500   13,740      
Minutes to clean after each proceure   5   5   15   35          
Minutes for each procedure   5   15   20   45          
Sanitation Minutes   19,200   22,000   45,000   87,500   173,700      
Procedure minutes   19,200   66,000   60,000   112,500   257,700      
                          
YRC operates at capacity. The proposed allocation bases for overhead are as follows:                          
Allocation Base   Driver                      
Administration   Number of procedures                      
Maintenance (including parts)   Capital cost of equipment (depreciation)                      
Sanitation   Total cleaning minutes                      
Utilities   Total procedure minutes                      
                          
                          
REQUIRED:                          
1. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs using the direct technician labour as the cost allocation base.                          
2. Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs using activity-based costing (ABC)

Answer 1

Answer:

1. Budgeted cost per service using the direct technician labour as the cost allocation base

Pre-determined rate = Total estimated overheads / Total value of Technician Labour

                                     = ($20,610 + $247,320 + $196,180 + $134,350) / $368,040

                                     = $598,460 / $368,040

                                     = 162.6% of Direct Technician labor

2. Budgeted cost per service using activity-based costing (ABC)

Note: Minor differences may rise due to rounding off of Decimals.