Analyze the following scenario: Jump Hospital currently allocates all maintenance department costs based on departmental square feet

Analyze the following scenario: Jump Hospital currently allocates all maintenance department costs based on departmental square feet. However, the manager of
the pharmacy department has suggested that an ABC approach be used for the portion of the maintenance department costs that relate to repairing equipment. Her
contention is that the pharmacy has relatively little equipment that breaks. However, it must subsidize many high-tech departments that require expensive
equipment repairs. Using the tables below, calculate the maintenance cost assigned to the pharmacy using the existing method and using an ABC approach. Clearly
label your calculations in your analysis.

Maintenance Costs
Routine MaintenanceRepairsTotal
Volume (Square Feet)100,000800
Labor Hours10,000400014,000
Labor Cost/Hour$12.00$18.00$13.71
Supplies$20,000$80,000$100,000
Administration$15,000
Department Information
PharmacyAll Other DepartmentsTotal
Square Feet2,00098,000100,000
Volume of Repairs3797800
Hours of Repairs63,9944,000
Supplies Used for Repairs$200$79,800$80,000
 

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