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Complete Problem 1 under the problem section on p. 251 (Ch. 10) of Essentials of Cost Accounting.
Answer the following questions regarding the scenario in Problem 1:
? What methods of cost allocation were used?
? How were cost centers determined?
? How would fixed and variable costing differ in this situation?
? How much would the transfer price be under
o ? full charges,
o ? variable costs,
o ? market price, and
o ? negotiated price?
? How much profit does each hospital make under each alternative?
? How much do the combined hospitals make under each of the above alternatives?
? What would happen if Western purchased from an outside laboratory for $375?
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