Question

A primary care clinic’s line-item operating budget shows

Salaries $1,000.000
Rent $300,000
Utilities $50,000
Depreciation $80,000
Total Expenses $1,430,000
The clinic has two major programs: scheduled visits and no appointment walk-ins. One-fourth of the salaries are attributable to the walk-in program. Rent and depreciation are allocated on a 50/50 basis with half for each program. Only 20% of the utilities are attributable to the walk-in program. What is the cost of the walk-in program?
a) $980,000
b) $715,000
c) $450,000
d) None of the above

Answer 1

c) $450,000

Step-by-step explanation:

The calculation of the cost of the walk-in program is shown below:-

Cost of the walk-in program = 1 ÷ 4 × Salaries + 1 ÷ 2 × (Rent + Depreciation) + 1 ÷ 5 × (Utilities)

= 1 ÷ 4 × $1,000,000 + 1 ÷ 2 × ($300,000 + $80000) + 1 ÷ 5 × $50,000

= $250,000 + $190,000 + $10,000

= $450,000

Therefore for computing the cost of the walk-in program we simply applied the above formula.