Question - David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below to answer problems 3, 4 and 5.
Square Footage Direct
Expenses Lab Tests
Utilities $ 200,000
Administration 2,000 500,000
Laboratory 2,000 625,000
Day-op Suite 3,000 1,400,000 4,000
Cystoscopy 1,500 300,000 500
Endoscopy 1,500 600,000 500
Total 10,000 $ 3,625,000 5,000
1. What are the Day Op Suite's total expenses?
2. What are the Cystoscopy Department's total expenses?
3. What are the Endoscopy Department's total expenses?