Doctors Beyond Borders (DBB) operates health programs around the world. It has a

Question

Doctors Beyond Borders (DBB) operates health programs around the world. It has a central staff of 100 people who administer its world-wide programs. DBB’s central operation buys and distributes all of the supplies used in its various country operations. DBB’s country director for Nigeria and her staff runs 20 clinics around the country. At the clinic level, doctors and nurses hired under two-year contracts, administer medical treatment free of charge to the local population. They use supplies shipped to them by DBB’s central staff based on the number of patients treated at each clinic.

From the perspective of the program director for Nigeria, for the coming year which of the five categories (underlined in bold above) of expenses are: (Write the general category of the expenses next to the categories below.)

Direct costs:

Indirect costs:

Fixed costs:

Variable costs:   

Which of the direct expenses for Nigeria would be classified as indirect from the perspective of a clinic director?

Explanation / Answer

Direct costs: Supplies used for treating the patient

Indirect costs:Rent, allocated expenses from central operations.

Fixed costs:Salares for doctors and nurses, Rent for the premises.

Variable costs: Supplies used

Direct expenses for Nigeria would be classified as indirect from the perspective of a clinic director: Salaries for doctors and nurses.

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