31) Butler Hospital wants to estimate the cost for each patient stay. It is a general health care facility offering only basic services and not specialized services such as organ transplants.
Required:
a. Classify each of the following costs as either direct or indirect with respect to each patient.
b. Classify each of the following costs as either fixed or variable with respect to hospital costs per day.
Direct Indirect Fixed Variable
Electronic monitoring ________ ________ ________ ________
Meals for patients ________ ________ ________ ________
Nurses’ salaries ________ ________ ________ ________
Parking maintenance ________ ________ ________ ________
Security ________ ________ ________ ________
32) The list of representative cost drivers in the right column below are randomized with respect to the list of functions in the left column. That is, they do not match.
Function
Representative Cost Driver
1.
Purchasing
A.
Number of employees
2.
Billing
B.
Number of shipments
3.
Shipping
C.
Number of customers
4.
Computer Support
D.
Number of invoices
5.
Personnel
E.
Number of desktop computers
6.
Customer Service
F.
Number of purchase orders
Required:
Match each business function with its representative cost driver.
Function
Insert letter of appropriate driver (A through F)
1.
Purchasing
2.
Billing
3.
Shipping
4.
Computer Support
5.
Personnel
6.
Customer Service
33) Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.