Cost Assignment Review for Community Hospital’s New Clinic

by | Aug 17, 2024 | business

Scenario
Community 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.
Instructions
The 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 (AI) as:
Direct or indirect (D or I)
Variable or fixed (V or F)
She has asked you to prepare 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
Technical Staff
Unit Secretary
Maintenance Contract
Office Supplies
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.

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

 

Cost Assignment Review for Community Hospital’s New Clinic

Characteristics of Expenses

Direct vs. Indirect Expenses

Direct Expenses are costs that can be directly traced to a specific service, product, or department. These expenses are incurred specifically for the operation of a particular clinic or function and can be directly associated with the revenue generated by that service.

Examples: Salaries of staff who work directly in the clinic, testing supplies used for patient tests.

Indirect Expenses are costs that cannot be directly traced to a specific service or department. These costs support the overall operations of the organization but cannot be directly linked to specific outputs.

Examples: Administrative salaries, utilities for the entire facility, and general office supplies.

Variable vs. Fixed Expenses

Variable Expenses are costs that change in proportion to the level of activity or volume of services provided. These costs increase or decrease based on the number of services rendered or products sold.

Examples: Testing supplies and technical staff wages, which vary based on the number of tests performed.

Fixed Expenses remain constant regardless of the level of activity within a certain range. These costs do not fluctuate with the volume of services provided and are incurred even if no services are rendered.

Examples: Office rent, manager’s salary, and maintenance contracts.

Cost Classification Table

Cost Item D or I V or F
Department Manager D F
Technical Staff D V
Unit Secretary D F
Maintenance Contract I F
Office Supplies I V
Testing Supplies D V
Office Rent I F
Electricity I F
Travel Expenses I V

Assumptions Made

In classifying the costs above, several assumptions were made:

1. Department Manager Salary: It is assumed that the department manager is directly responsible for overseeing the clinic’s operations, thus making it a direct expense, while being fixed as it does not change with the level of services provided.

2. Technical Staff Wages: The technical staff is assumed to be directly involved in providing services, making this a direct expense; however, their hours worked can vary significantly based on patient volume, thus classifying this cost as variable.

3. Unit Secretary Salary: The unit secretary is also assumed to be directly tied to the operations of the clinic, thus being classified as a direct expense; it is also fixed since they will work full-time regardless of patient volume.

4. Maintenance Contract: This cost is considered indirect because it covers equipment used for multiple services in the hospital rather than being specific to the clinic. It is fixed as it remains constant throughout the year.

5. Office Supplies: Although office supplies are necessary for the clinic, they are considered indirect as they support overall operations and can vary based on usage, making them variable.

6. Testing Supplies: These are directly related to the services provided and vary depending on the number of tests, hence classified as direct and variable.

7. Office Rent: This cost supports the clinic but is not directly traceable to any specific service, thus classified as indirect. It is also fixed for the first year.

8. Electricity Costs: These are considered indirect because they support multiple departments within the facility and are treated as fixed in this context.

9. Travel Expenses: While these costs support the manager’s role in overseeing operations (indirect), they vary based on travel needs, thus classified as variable.

By making these distinctions, we can better understand the financial implications of operating the new clinic and ensure accurate cost tracking and reporting.

 

 

 

 

 

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