What recommendation regarding the final allocation amounts?

Assignment Help Accounting Basics
Reference no: EM13863910

Cost Allocation Concepts

1. Is it "fair" for the Dialysis Center to suffer in profitability, and hence for the department head to possibly lose his bonus, just because the Outpatient Clinic needs additional space?

2. In the past, the medical center aggregated all facility costs and then allocated the total amount

on the basis of square footage. This methodology assigned an average cost rate to each patient service department, regardless of whether its space is new or old, or prime or poor. The proposed allocation for the Dialysis Center, on the other hand, requires it to bear the true facility costs of its new space. What are the advantages and disadvantages of the new methodology? Do you support the new allocation scheme?

3. If the new allocation method for facility costs is implemented, what should be the facility allocation to the Dialysis Center in 20 years, when the loan (which is the basis for the higher cost allocation) has been paid off and there are no longer any actual facility costs?

4. Explain how the revenue from medical (pharmacy) supplies is currently handled for profit and loss reporting purposes. Is there a problem with the current system? Is there a better way of reporting this revenue? If so, what is it?

5. When all issues related to the decision are considered, what is your recommendation regarding the final allocation amounts?

Reference no: EM13863910

Questions Cloud

Arbitrage and the law of one price : Assume for this problem that markets are frictionless (i.e. no transactions costs and no short-selling constraints). It's a week before the Cubs-White Sox game and you _nd a market that sells two securities: What is the risk-free rate if there is no ..
Cost per equivalent unit for each of three cost items-total : Regal Polish manufactures a single product in one department and uses a process costing system. At the start of May, there were 5,000 units in process that were 100 percent complete with respect to direct materials and 50 percent complete with respec..
Paper on personality : Paper on Personality, The paper should provide, but not be limited to, the following information: A clear definition of the topic/issue selected and Explanation of how the topic pertains to the field of Organizational Behavior
Total amount of cash payments for merchandise : A company's inventory balance was $204,000 at 12/31/11 and $191,600 at 12/31/12. Its accounts payable balance was $81,600 at 12/31/11 and $85,800 at 12/31/12, and its cost of goods sold for 2012 was $734,400. The company's total amount of cash paymen..
What recommendation regarding the final allocation amounts? : recommendation regarding the final allocation amounts?
What is the amount of cost of goods manufactured : The beginning and ending finished goods inventories of the Prize Ring manufacturing company were $87,000 and $82,000 respectively. If cost of goods sold equaled $73,200, what is the amount of cost of goods manufactured for this period?
Inspection cost is mixed cost that depends on units produced : January units produced 630 & inspection cost $8,850. February units produced 615 & in $8,819. March 602 units produced & inspection cost $8,760. April 595 unit produced & $8,743 inspection cost. Management believes that inspection cost is a mixed cos..
Describe a high-level timeline that includes key tasks : Describe a high-level timeline that includes key tasks and deadlines
Management believes that maintenance cost is mixed cost : April machine-Hours 5,799 & maintenance Cost $30,379. May machine hours 5,782 & maintenance cost $30,289. June machine-hours 5,764 & maintenance cot $30,237. July machine-hours 5,761 & $30,233. August machine-hours 5,717 & $30,078. Management believe..

Reviews

Write a Review

Accounting Basics Questions & Answers

  Shares of common stock of long corporation

Cayuga Meadows purchased 42,000 shares of common stock of Long Corporation as a long-term investment for $1,000,000. During the year, Long Corporation reported net income of $500,000 and paid dividends of $200,000.Instructions:

  A company sells computers at a selling price of 1400 each

a company sells computers at a selling price of 1400 each. each computer has a 2 year warranty that covers replacement

  Tendency for people to interpret labels

What do sociologists call a tendency for people to interpret labels in a particular way while the same labels lead them to be blind to the messages they actually convey?

  Fashion jeans inc sells two lines of jeans simple life and

fashion jeans inc. sells two lines of jeans simple life and fancy life. simple life sells for 85.00 a pair and fancy

  When the amount we expect to be collect can be determined

when the amount we expect to be collect can be determined then the revenue is recognized to the extent that collections

  The selling and administrative expense budget of fenley

the selling and administrative expense budget of fenley corporation is based on the number of units sold which are

  The per-unit standards for direct labor are 2 direct labor

the per-unit standards for direct labor are 2 direct labor hours at 12 per hour. if in producing 1200 units the actual

  Flexible-budget variances

Compute the static budget variances and the flexible-budget variances for variable and fixed costs for the systems consulting department for June 20X1.

  What is exponential depletion of resources what is peak

what is exponential depletion of resources? what is peak depletion of resources? what are the economic consequence of

  The petty cash fund of the brooks agency is established at

the petty cash fund of the brooks agency is established at 150. at the end of the current period the fund contained 28

  Sharing income in the ratio

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000 respectively. Income Summary has a credit balance of $30,000. What is Tomas' capital balance after closing Income Summary to Capita..

  Introduction to consolidated financial statements

Paige, Inc. owns 80% of Sigler, Inc. During 2011, Paige sold goods with a 40% gross profit to Sigler. Sigler sold all of these goods in 2011. For 2011 consolidated financial statements, how should the summation of Paige and Sigler income statement..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd