This case describes a situation in which Big Bend attempts to find space for expansion within its existing complex. Unable to find the space, the organization decides to construct a building nearby. Importantly, the organization decides to move the Dialysis Center out to make room for the Outpatient Clinic, which is experiencing growth. This move results in the organization being able to manage more outpatient clients, but also increases costs. As a result of the move, more indirect costs exist for Big Bend, and each department must absorb more of these indirect costs.

The organization also is moving to a system in which departmental bonuses are now awarded on a total $($full$)$ cost basis, not just direct costs. Therefore, the fairness of the cost allocations are of paramount concern.

The Dialysis Center$$s basic data prior to expansion is:

Revenue $$2,700,000$

Direct Expenses $$2,100,000$

Facilities Cost $$300,000$

General Overhead $$270,000$

Net Profit $$30,000$