Pathos Radiology Center (PRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). PRC has developed a reputation as a top radiology center in the state. It has achieved this status because it constantly re-examines its processes and procedures. It has been using a single, facility wide overhead allocation rate. The Vice President of Finance believes that PRC 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?"

• Calculate the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRI using direct technician labor costs as the allocation basis.
• Calculate the budgeted cost per service of X-rays, ultrasounds, CT scans, and MRI if PRC allocated overhead costs using activity-based costing.
• Evaluate the differences between the 2 costing models, and assess the value of activity-based costing for management profitability analysis and decision making.
• Explain how the disaggregation of information could be helpful to PRC's intention to continuously improve its services.

Pathos Radiology Center Budgeted Information for the Year Ended May 31, 2022 X-rays Ultrasound CT Scan MRI Total Technician labor $ 62,000 $101,000 Depreciation Materials Administration Maintenance Sanitation 42,240 22,600 256,000 16,400 $155,000 424,960 $ 103,000 876,800 $ 421,000 1,600,000 23,600 31,500 94,100 20,000 250,000 252,500 Utilities 151,100 $126,840 $373,400 $603,560 $1,011,300 $2,788,700 Number of procedures 3,842 4,352 2,924 2,482 Minutes to clean after 5 5 15 35 each procedure Minutes for each 5 15 25 40 procedure RRC operates at capacity. The proposed allocation bases for overhead are: Administration Maintenance (including parts) Sanitation Utilities Number of procedures Capital cost of the equipment (use Depreciation) Total cleaning minutes Total procedure minutes