David Jones, the new administrator for a surgical clinic,
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 the question
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 1,500 350,000 500
Endoscopy 1,500 300,000 500
Total 10,000 3,625,000 5,000
I have this formula but is not giving me the correct answer.
Based on the scenario above, what are the Endoscopy Department’s total expenses?
Total expenses=square foot of end/(square foot of endo + cysto foot square)*admin cost + direct expense + admin/total cost * endoscopy direct + Endo lab test/ total lab test * laboratory cost
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