Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 11

Cost classifications for a service company
A partial list of Foothills Medical Center's costs follows:
a. Cost of patient meals
b. Nurses' salaries
c. Depreciation of X-ray equipment
d. Utility costs of the hospital
e. Salary of intensive care personnel
f. Cost of X-ray test
g. Operating room supplies used on patients (catheters, sutures, etc.)
h. Salary of the nutritionist
i. General maintenance of the hospital
j. Cost of new heart wing
k. Cost of drugs used for patients
l. Cost of advertising hospital services on television
m. Cost of improvements on the employee parking lot
n. Cost of intravenous solutions used for patients
o. Training costs for nurses
p. Cost of laundry services for operating room personnel
q. Doctor's fee
r. Overtime incurred in the Patient Records Department due to a computer failure
s. Cost of blood tests
t. Cost of maintaining the staff and visitors' cafeteria
u. Depreciation on patient rooms
Instructions
1. What would be Foothills Medical Center's most logical definition for the final cost object
2. Identify whether each of the costs is to be classified as direct or indirect. For purposes of classifying each cost as direct or indirect, use the patient as the cost object.