San Diego State University Operations And Supply Chain Management Assignment Help - Analysis

Question - 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 Maintenance Repairs Total
Volume (Squa ...Read More re Feet) 100,000 800
Labor Hours 10,000 4000 14,000
Labor Cost/Hour $12.00 $18.00 $13.71
Supplies $20,000 $80,000 $100,000
Administration $15,000

Department Information
Pharmacy All Other Departments Total
Square Feet 2,000 98,000 100,000
Volume of Repairs 3 797 800
Hours of Repairs 6 3,994 4,000
Supplies Used for Repairs $200 $79,800 $80,000 ...Read Less

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