Question;ACCT 313.001 Fall 2013;Course Project (Part 3);3%;of course grade;Please;complete the following problem as required. This assignment is due Wednesday;December 11 at the beginning of class.;Aurora;Medical Center(AMC), located outside Phoenix, has an inpatient hospital and;outpatient clinic. Because itis located ina retirementarea;a substantial fraction of its patients are elderly, and hence their medical insurance;is provided through the Medicare program of the federal government. Medicare;outpatient clinic care is reimbursed by the federal government at cost. Each;clinic with Medicare outpatients submits a reimbursement form to Medicare;reporting the costs of treating these patients. Medicare inpatient;reimbursement is based on predetermined rates depending on the diag?nosis. For;example, all Medicare-paid hip replacements in Phoenix are reimbursed at;$14,800 per patient, regardless of the hospital's cost.;AMC;has two administrative departments that provide services to both the hospital;and the clinic: accounting and information management (IM). The accompanying;tables summarize the service levels provided by these two departments;Administrative;Departments;Accounting;IM;Total;cost Allocation base;$3,800,000 $4,800,000;Number of transactions Disk space (gigabytes);Service;Levels;Transactions;Gigabytes;Accounting;IM;Hospital;Clinic;40,000;1,100,000;600,000;8;7;9;Total;1,740,000;24;Accounting;department costs are distributed to users based on the number of transactions;posted to the general ledger generated by that user. IM costs are distributed;to users based on the gigabytes of storage dedicated to the user. Medicare;guidelines allow these allocation bases to be used/Medicare also provides some;discretion to hospitals in the methods used to allocate costs, as long as they are;reasonable and generally accepted.;Required;a. Design a report for;assigning the accounting and IM costs to the hospital and clinic. How much of;the costs of accounting and IM should be allocated to inpatients and;outpatients?;b. Justify;your design in (a).Explain why AMC should follow your suggestions.
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