Deliverable 4 – Costing and Decision Making
Assignment Content
CompetencyAnalyze cost behaviors and production costing methods. Student Success CriteriaView the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane. ScenarioCommunity Hospital is considering offering a new clinic for hospital employees and their dependents. The Accounting Manager would like you to assist with a review of cost assignments within the cost accounting system for a new service that is being considered. They review the following new service and cost with you.There will be a manager hired to oversee the operations of the new service at a salary of $6,000 per month. Technical staff will be scheduled on an as-needed basis, based on number of tests done, and will be paid $25.00 per hour. In addition, there will be one new full-time unit secretary at $15.00 per hour. A maintenance contract has been purchased to cover any needed repairs on the equipment at a cost of $10,000 for 12 months. Office supplies generally run about the same each month, and are roughly $100. Each test requires approximately the $75 of testing supplies. The office rent is $1,000 per month for the first year and then increases to $1,200 for the second year.
Electricity
to run all of the office equipment is expected to be $750 per month. Travel expenses for the manager will be $150. InstructionsThe Accounting Manager would like you to first create a Word document where you describe the characteristics of direct vs. indirect expenses and variable vs fixed expense. Following your discussion, you should create a table to classify each cost item (A–I) as:
Direct or indirect (D or I)
Variable or fixed (V or F)
She has asked you toprepare a table in Word with the following information:You will have two answers (D or I; V or F) for each of the following items: Cost Item D or I V or F
Department Manager
Unit Secretary
Maintenance Contract
Testing Supplies
Office Rent
Electricity
Travel Expenses
Finally, in your document, the Accounting Manager would like to know if there are any other assumptions that you have made in making your selections in the table.Save your assignment as a Microsoft Word file. (Mac users, please remember to append the “.docx” extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date (yyyy-mm-dd). An example is shown below:
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