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37 ABC, health care. Uppervale Health Center runs two programs: drug addict rehabilitation and Stercare (counseling and support of patients after release from a mental hospital). The center's budget for 2010 follows: . Professional salaries: 4 physicians x $150,000 12 psychologists x $15,000 . 16'nurses $30,000 1. Medical supplies-- I Rent and clinic maintenance Ii Administrative costs to manage patient charts, food, laundry Laboratory services Total $600,000 900,000...no cu A80,000 $1,980,000 220,000 126,000 440,000 84,000 DE $2,850,000 Otto phys (1000 4,0 1234 pogled Nurse (30 Qur - (200 + ? UT 30 CHAPTER 5 ACTIMTY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT Muriel Clayton, the director of the center, is keen on determining the cost of each program. Clayton piled the following data describing employee allocations to individual programs: Drug Aftercare Total Employees Physicians Psychologists - Nurses 4 6 8 10 Clayton has recently become aware of activity-based costing as a method to refine costing systems su asks her accountant, Huey Deluth, how she should apply this technique. Deluth obtains the following bud geted information for 2010: (based. - Square feet of space occupied by each program - Patient-years of service Number of laboratory tests Drug 9,000. 50 1,400 Aftercare 12,000 Church, fowl / medie laging Total 21,000 60 110 Socce 700 2,100 Required -- 1. a. Selecting cost-allocation bases that you believe are the most appropriate for-allocating indirect costs to programs, calculate the budgeted indirect cost rates for medical supplies; rent and clinic maintenance; administrative costs for patient charts, food, and laundry, and laboratory services. b. Using an activity-based costing approach to cost analysis, calculate the budgeted cost of each pro- gram and the budgeted cost per patient-year of the drug program. What benefits can Uppervale Health Center obtain by implementing the ABC system? 2 What factors, other than cost, do you think Uppervale Health Center should consider in allocating resources to its programs? 11

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