Reference no: EM132577321
Question 1: Is direct labour likely to be a fixed cost or a variable cost in the current Australian business environment? Explain your answer by referring to the examples discussed in second real life in the section 'Cost behaviour pattern' titled 'Managing costs in challenging times' which explores the different ways that labour costs might behave in the contemporary business environment.
Question 2: The Mary Ellen Hospice provides services for terminally ill patients and their families. The hospice provides an accommodation unit for up to six patients and a support service for outpatients. In preparing next year's budget, the accountant is analysing the behaviour of the hospice's major costs, listed below, and seeking possible cost drivers.
(a) The salary of the administrator who manages the hospice and assists in the accommodation unit.
(b) The salaries of the support staff who are employed on a casual basis to visit patients at home.
(c) The salary of the physiotherapist who visits the hospice each week to run a three-hour exercise clinic available to accommodation patients and outpatients.
(d) The salary of the anaesthetist who visits the hospice once a week to develop and monitor pain management programs for patients.
(e) The lease payments on the two cars used by the support staff.
(f) The cost of petrol used by the support cars.
(g) Depreciation costs on pain relief medication pumps. These pumps are used within the accommodation unit and are hired to outpatients on a weekly basis. Pumps are purchased as required and depreciated using a straight-line method.
(h) The rent paid for the hospice buildings.
(i) The salaries of the nurses who work in the accommodation unit. One nurse is rostered for each shift and there are three shifts per day.
(j) The cost of the cleaning contract for the hospice, which results in a set payment each month.
Requires:
1. For each cost, suggest two possible cost drivers, giving your reasons
2. Where possible. Classify each cost as unit, batch, product or facility level.
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