1-1, 1-5 EXERCISE 1-1 Identifying Direct and Indirect Costs LO1-1 Northwest Hosp

ID: 2328965 • Letter: 1

Question

1-1, 1-5

EXERCISE 1-1 Identifying Direct and Indirect Costs LO1-1 Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics. Required: For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column. Direct Indirect Cost Cost Cost Cost Object Ex. Catered food served to patients 1. The wages of pediatric nurses 2. Prescription drugs 3. Heating the hospital 4. The salary of the head of pediatrics 5. The salary of the head of pediatrics 6. Hospital chaplain's salary 7. Lab tests by outside contractor 8. Lab tests by outside contractor A particular patient The pediatric department A particular patient The pediatric department The pediatric department A particular pediatric patient A particular patient A particular patient A particular department EXERCISE 1-2 Classifying Manufacturing Costs LO1-2

Explanation / Answer

Differential Cost

Sunk Cost

Opportunity Cost

Cost of X ray film used in the old machine

Cost of the old X ray machine

The salary of the head of the radiology dept

The salary of the head of the laboratory dept

Cost of the new color laser printer

Rent on the space occupied by radiology

The cost of maintaining old machine

Benefits from a new DNA analyzer

Cost of electricity to run the X ray mach.