Question

Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics.

Required:

For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column.

Answer 1

Cost Cost Object Direct Cost Indirect Cost

1. The wages of pediatric nurses The pediatric department X

2. Prescription drugs A particular patient X

3. Heating the hospital The pediatric department X

4. The salary of the head of pediatrics The pediatric department X

5. The salary of the head of pediatrics A particular pediatric patient X

6. Hospital chaplain’s salary A particular patient X

7. Lab tests by outside contractor A particular patient X

8. Lab tests by outside contractor A particular department X 

Cost Cost Object Direct Cost Indirect Cost

1. The wages of pediatric nurses The pediatric department X

2. Prescription drugs A particular patient X

3. Heating the hospital The pediatric department X

4. The salary of the head of pediatrics The pediatric department X

5. The salary of the head of pediatrics A particular pediatric patient X

6. Hospital chaplain’s salary A particular patient X

7. Lab tests by outside contractor A particular patient X

8. Lab tests by outside contractor A particular department X