| GHA 4 TEMPLATE |
| This assignment is designed to help you learn how to determine total costs by combining direct and indirect costs for a particular department. |
| In this GHA, you will be determining the total costs for three departments: (1) Physical Therapy (2) Occupational Therapy and (3) Speech Therapy. |
| To determine the total costs, you will need to add the direct costs to the indirect costs using the template provided below. |
| Please use the example provided in the assignment description if you find that you need some support understanding the required calculations. |
| DIRECT COSTS |
| The direct costs for each department are easily identifiable, because they are the costs that are directly attributable to the department. |
| The direct costs are as follows: |
| Physical Therapy (PT) | 410,000 |
| Occupational Therapy (OT) | 190,000 |
| Speech Therapy (ST) | 120,000 |
| Total Direct Costs | 720,000 |
| INDIRECT COSTS |
| The indirect costs will need to be allocated to Physical Therapy (PT), Occupational Therapy (OT), and Speech Therapy (ST). |
| The indirect costs in this scenario have been identified as: (1) Clerical Salaries, (2) Administrative Salaries, and (3) Computer Services. |
| The total indirect costs that need to be allocated to PT, OT, and ST are as follows: |
| Clerical Salaries | 56,000 |
| Administrative Salaries | 55,000 |
| Computer Services | 80,000 |
| Total Indirect Costs | 191,000 |
| Each type of indirect cost will need to be allocated to each department based on an allocation basis that is appropriate for the particular type of cost. |
| Clerical Salaries will be allocated based on Visit Volume. |
| Administrative Salaries will be allocated based on the Proportion of Direct Costs |
| Computer Services will be allocated based on the Number of Computers in Service. |
| Visit | Computers |
| Volume | in Service |
| Physical Therapy (PT) | 9,600 | 10 |
| Occupational Therapy (OT) | 4,000 | 3 |
| Speech Therapy (ST) | 2,400 | 3 |
| Total | 16,000 | 16 |
| Step 1: Set-up a Table of Direct and Indirect Costs |
| Direct Cost | Indirect Cost | Total |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Totals |
| Step 2: Determine the indirect costs that should be allocated from Clerical Salaries, Administrative Salaries, and Computer Services to PT, OT, and ST. |
| Clerical Salaries |
| The total indirect costs for Clerical Salaries is ____________. |
| Clerical Salaries will be allocated based on Visit Volume. |
| The Visit Volume for PT, OT, and ST are as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Visit Volume |
| Based on this Visit Volume, the percentage of Visit Volume by department is as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total |
| Use the percentage of Visit Volumes to determine the allocation of the Indirect Costs for Clerical Salaries: |
| Total indirect costs for Clerical Salaries: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Indirect Costs |
| Administrative Salaries |
| The total indirect costs for Administrative Salaries is _______________. |
| Administrative Salaries will be allocated based on the proportion (%) of direct costs. |
| The Direct Costs for PT, OT, and ST are as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Visit Volume |
| The proportion of these direct costs is as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total |
| Use the proportion of the direct costs to determine the allocation of the Indirect Costs for Administrative Salaries: |
| Total indirect costs for Clerical Salaries: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Indirect Costs |
| Computer Services |
| The total indirect costs for Computer Services is ___________. |
| Computer Services will be allocated based on the number of computers in service. |
| The number of computers in service for PT, OT, and ST are as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Visit Volume |
| The proportion of computers in service is as follows: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total |
| Use the proportion of the numbers of computers in service to determine the allocation of the Indirect Costs for Computer Services: |
| Total indirect costs for Computer Services: |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Indirect Costs |
| Step 3: Determine to total indirect costs for PT, OT and ST. |
| Based on your calculations in Step 2, you can create a table to determine the total indirect costs for PT, OT, and ST: |
| TOTAL |
| Clerical | Administrative | Computer | INDIRECT |
| Salaries | Salaries | Services | COSTS |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total Indirect Costs |
| Step 4: Add the direct costs by department from Step 1 to the total indirect costs by department from Step 3 to get your total costs. |
| (From Step 1) | (From Step 3) |
| Direct Cost | Indirect Cost | Total Costs |
| Physical Therapy (PT) |
| Occupational Therapy (OT) |
| Speech Therapy (ST) |
| Total |