Week 8 Problems .docx

# Week 8 Problems .docx - P 7-1 MRI Cost allocation Cost...

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P 7-1: MRI Cost allocation: Cost allocation act pervade all organization. Managers allocate costs based on financial reporting, taxes, cost-reimbursement, and government regulations. Cost-based reimbursements are another reason for cost allocation. Magnetic resonance imaging (MRI) is noninvasive medical diagnostic device that uses magnetic and radio waves to produce a picture of an area under investigation. Governments reimburse MRI imaging based on the reported cost by the hospital. Reimbursable costs include both the fixed and variable costs of providing MRIs. Private insurers reimburse MRI imaging based on a standard fee schedule set by the insurance company. The typical elderly patient requires one hour of MRI time to produce the 10 MRI images needed for the radiologist. a. Calculate the Memorial Hospital’s projected cost per MRI image Total projected costs = \$885,000 No. of MRI images = \$33,600 Cost per MRI image = Total projected cost /No. of MRI images = \$885,000/\$33,600 = \$ 26.34 per image b. Calculate the Memorial Hospital’s projected cost per hour of MRI time.

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