Radhika's Radiology Centre (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top radiology centre in the area. RRC has achieved this status because it constantly re-examines its processes and procedures. RRC has been using a single, facility-wide overhead allocation rate. The VP of Finance believes that RRC can make better process improvements if it uses more disaggregated cost information. She says, "We have state-of-the-art medical imaging technology. Can't we have state-of-the-art accounting technology?" The following budgeted information is available:

RRC operates at capacity. The proposed allocation bases for overhead are as follows:
Administration ...........Number of procedures
Maintenance (including parts) .....Capital cost of equipment (amortization)
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 if RRC allocated overhead costs using activity-based costing (ABC).
3. Explain how the disaggregation of information could be helpful to RRC's intention to continuously improve its services.

Transcribed Image Text:

Radhika's Radiology Centre Budgeted Information For the Year Ending May 30, 2013 Rays Ultrasound CT Scan MRI Total Technician labour Amortization Materials Administration Maintenance Sanitatiorn Utilities Totals Number of procedures Minutes to clean after S 61,440 32,240 22,080 $105,600 268,000 16,500 S 96,000 S 105,000 S 368,040 897,500 1,636,740 93,830 20,610 247,320 196,180 134,350 $559,000 $1,033,750 S2,697,070 439,000 24,000 1,250 $115,760 3,840 $390,100 4,400 3,000 15 20 2,500 35 45 each procedure Minutes for each procedure 15