Roxbury's Radiology Center (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as

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Roxbury's Radiology Center (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top Radiology Center in the state. RRC has achieved this status because it constantly reexamines 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?"
Roxbury's Radiology Center (RRC) performs X-rays, ultrasounds, CT scans, and

RRC operates at capacity. The proposed allocation bases for overhead are as follows:
Administration..........................................................Number of procedures
Maintenance (including parts).........Capital cost of the equipment (use 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 direct technician labor costs as the allocation basis.
2. Calculate the budgeted cost per service of X-rays, Ultrasounds, CT scans, and MRIs if RRC allocated overhead costs using activity-based costing.
3. Explain how the disaggregation of information could be helpful to RRC's intention to continuously improve its services.

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Cost Accounting A Managerial Emphasis

ISBN: 9780273753872

14th Global Edition

Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan

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