Chapter 2 An Introduction to Cost Terms and Purposes

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.