Question

13. Claremore Clinic has identified three activities for daily maternity care: occupancy and feeding, nursing, and nursing supervision. The nursing supervisor oversees 120 nurses, 20 of whom are maternity nurses (the other nurses are located in other care areas such as the emergency room and intensive care). The nursing supervisor has three assistants, a secretary, several offices, computers, phones, and furniture. The three assistants spend 60% of their time on the supervising activity and 40% of their time as surgical nurses. They each receive a salary of $80,000. The nursing supervisor has a salary of $100,000. She spends 100% of her time supervising. The secretary receives a salary of $40,000 per year. Other costs directly traceable to the supervisory activity (depreciation, utilities, phone, etc.) average $220,000 per year.
Calculate the cost for nursing supervision.

a.$220,000 b.$600,000 c.$100,000 d.$504,000

16. Which of the following items is not found on the income statement of a service organization?

a.Selling expenses b.Operating income c.Sales revenue d.Cost of goods sold

24. _____ are assigned using direct tracing and resource drivers.

a.Profits b.Products c.Activity drivers d.Product costs e.Resource costs

26. Glascro Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected as follows:

Month	Lease cost	Machine hours
April	$15,000	800
May	10,000	600
June	12,000	770
July	16,000	1,000

Using the high-low method, calculate the variable rate per machine hour for the lease cost.

a.$65 per machine hour b.$59 per machine hour c.$15 per machine hour d.$25 per machine hour

Answer 1

Question 13. Solution:

Cost of nursing supervision = Salary to assistants×60% + Supervisor's salary + Secretary's salary + other costs

   = $80,000×3×60% + $100,000 + $40,000 + $220,000

   = $504,000

Thus, answer is option d

Question 16

Solution: 'Cost of goods sold' is not found on the income statement of a service organization because these organizations provide services they don't have any goods to sale.

Thus, answer is option d. cost of goods sold

Question 24.

Solution: Resource costs are using direct tracing and resource drives. examples of resource costs: Cost of direct material, wages, supplies expense etc.

Thus, answer is option e