Analyze the following scenario: Jump Hospital currently allocates all maintenanc
ID: 2777282 • Letter: A
Question
Analyze the following scenario: Jump Hospital currently allocates all maintenance department costs based on departmental square feet. However, the manager of the pharmacy department has suggested that an ABC approach be used for the portion of the maintenance department costs that relate to repairing equipment. Her contention is that the pharmacy has relatively little equipment that breaks. However, it must subsidize many high-tech departments that require expensive equipment repairs. Using the tables below, calculate the maintenance cost assigned to the pharmacy using the existing method and using an ABC approach. Clearly label your calculations in your analysis.
Maintenance Costs
Routine Maintenance
Repairs
Total
Volume(Square feet)
100,000
800
Labor Hours
10,00
4,000
14,000
Labor Cost/Hour
$12,000
$18.00
$13.71
Supplies
$20,000
$80,000
$100,000
Administration
$15,000
Routine Maintenance
Repairs
Total
Volume(Square feet)
100,000
800
Labor Hours
10,00
4,000
14,000
Labor Cost/Hour
$12,000
$18.00
$13.71
Supplies
$20,000
$80,000
$100,000
Administration
$15,000
Explanation / Answer
Calculation of total cost Particular Amount Amount Route en Maintenance Cost Labour Cost = 10000*$12 $120,000.00 Supplies $20,000.00 Repairs Labour Cost = 4000*$18 $72,000.00 Supplies $80,000.00 Administration Cost $15,000.00 Total Cost $307,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.