For the cost incurred at Northwest Hospital, we have to indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column.
For the solution refer to the second image.
And for the question refer to the first image.
Direct costs can be observed directly on the cost object, whereas indirect costs cannot be observed directly on the cost object.
Direct costs that can be traced back to a pediatric patient include prescription drugs, tests performed by both internal and external contractors, chaplain's salary, and salaries for pediatric nurses.
Increasing the temperature of the hospital, and remuneration of the head of pediatrics are indirect costs that cannot be traced back to the pediatric patient.
This is due to the fact that we cannot directly attribute their work or expenses to the patient.
Hence, the correct answer is in the second picture attached.
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