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Answer To VMD Medical Imaging Center

The document compares three different costing systems for allocating overhead costs across different medical equipment. The existing system allocates overhead costs based on a single burden rate applied to direct labor costs. The system suggested by Crest allocates employee-related overhead based on direct labor costs and equipment-related overhead based on equipment run times. The system suggested by Posh further separates equipment overhead into high-tech and low-tech equipment overhead allocated based on utilization of each type of equipment.

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Pragathi Sundar
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585 views2 pages

Answer To VMD Medical Imaging Center

The document compares three different costing systems for allocating overhead costs across different medical equipment. The existing system allocates overhead costs based on a single burden rate applied to direct labor costs. The system suggested by Crest allocates employee-related overhead based on direct labor costs and equipment-related overhead based on equipment run times. The system suggested by Posh further separates equipment overhead into high-tech and low-tech equipment overhead allocated based on utilization of each type of equipment.

Uploaded by

Pragathi Sundar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Existing Costing System Burden Rate 144.

12%
Direct Labour Cost Overhead Cost
Total Cost
1,375,571 1,982,428
X Ray 417,073 601,072 1,018,145
Floroscopic 414,047 596,711 1,010,758
CAT 270,850 390,340 661,190
MRI 273,601 394,305 667,906

Costing System suggested by Crest


Overhead Cost 1,982,428
Employee related Overhead 721,392 Allocated based on Direct Labour Cost
Equipment related overhead 1,261,036 Allocated based on Equipment Run Tim

Direct Labour Cost Overhead Cost


Run Time
1,375,571 721,392
X Ray 417,073 218,726 1,060
Floroscopic 414,047 217,139 1,312
CAT 270,850 142,042 1,394
MRI 273,601 143,485 2,515
6,281

Costing System suggested by Posh


Overhead Cost 1,982,428
Employee related Overhead 721,392 Allocated based on Direct Labour Cost
Equipment related overhead 1,261,036
High Tech equipment overhead 921,793 Allocated based on high tech equipmen
Low Tech equipment overhead 339,243 Allocated based on low tech equipment

Direct Labour Cost Overhead Cost High Tech


1,375,571 721,392 Utilisation
X Ray 417,073 218,726 268
Floroscopic 414,047 217,139 579
CAT 270,850 142,042 819
MRI 273,601 143,485 2,515
4,181
ocated based on Direct Labour Cost
ocated based on Equipment Run Time

Overhead Cost Total Cost Difference


212,816 848,615 169,530
263,410 894,596 116,162
279,873 692,765 (31,575)
504,936 922,022 (254,117)

ocated based on Direct Labour Cost

ocated based on high tech equipment run hours


ocated based on low tech equipment run hours

Low Tech
Overhead Cost Overhead Cost Total Cost Difference
Utilisation
59,086 792 127,943 822,829 195,316
127,653 733 118,412 877,251 133,507
180,566 575 92,888 686,347 (25,156)
554,487 - - 971,573 (303,667)
2,100

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