connect EXERCISE 1-1 Identifying Direct and Indirect Costs LO1-1 Northwest Hospi

Question

connect EXERCISE 1-1 Identifying Direct and Indirect Costs LO1-1 Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics Required For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column Direct Indirect Cost Cost Cost Object Cost A particular patient The pediatric department A particular patient The pediatric department The pediatric department A particular pediatric patient A particular patient A particular patient A particular department Ex. Catered food served to patients 1. The wages of pediatric nurses 2. Prescription drugs 3. Heating the hospita 4. The salary of the head of pediatrics 5. The salary of the head of pediatrics 6. Hospital chaplain's salary 7. Lab tests by outside contractor 8. Lab tests by outside contractor EYERCISE 1-2 Classifving Manufacturing Costs LO1-2

Explanation / Answer

For this case,

Direct cost is a cost that can be easily traced to specified cost object whereas indirect cost that cannot be traced to specified cost object

Direct cost Indirect cost Explanation 1 X Traceable to particular department (wages of same department) 2 x prescription made to particulat patient is directly traceable 3 x not traceable to particular department 4 x Traceable to particular department (salary of same department) 5 x not traceabe to any particular department 6 x not traceabe to any particular department 7 x test made for particular patient is traceable to that patient only 8 x is not traceable to any particular patient

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