Big Bend Medical Center.docx - Big Bend Medical Center The issues that are important in this case include finding an acceptable and fair allocation of

Big Bend Medical Center.docx - Big Bend Medical Center The...

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Big Bend Medical Center The issues that are important in this case include finding an acceptable and fair allocation of facilities cost (building depreciation and long-term debt) and general overhead (administration, finance, maintenance and housekeeping) among the Dialysis Center (DC)and Outpatient Clinic (OC)for the proposed expansion and are outlined below: 1.The management should go ahead with moving the DC to a new location because it would free space within the complex to accommodate recent growth in volume of the OC. 2.The main issues under discussion are the allocation of facilities cost and general overhead
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Unformatted text preview: with the new proposed expansion affecting profitability of DC. 3.The annual cost of financing for the new building of DC of $400,000 can be offset by $400,000 of revenue that is generated by sale of drugs at the DC. This revenue should be allocated to the DC instead of the pharmacy. 4.Another option is to use the rate of $15/square foot for the “new” DC building and allocating remainder of the facilities cost for new DC to the OC, since it was the OC that required the expansion and move of DC to a new building....
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  • Fall '13
  • JeanCooper

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