Question

Activity-Based Product Costing

Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients:

		Patient Category
	Driver	Normal	Intensive	Activity Rate
Treating patients	Treatments	6,900	9,500	$4.00
Providing hygienic care	Hygienic hours	5,300	18,100	5.00
Responding to requests	Requests	32,000	80,000	2.00
Monitoring patients	Monitoring hours	6,000	72,000	3.00

Required:

1. Determine the total nursing costs assigned to each patient category.

	Costs Assigned
Normal	$
Intensive	$

2. Output is measured in patient days. Assuming that the normal patient category uses 8,000 patient days and the intensive patient category uses 6,400 patient days, calculate the nursing cost per patient day for each type of patient. Round your answers to the nearest cent.

Normal	$ per patient day
Intensive	$ per patient day

3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient days is the only driver needed to assign nursing costs to each type of patient. Calculate the charge per patient day using this approach. Round your answer to the nearest cent.
$ per patient day

Answer 1

Answers

• [1]

	Cost Assigned
Normal	$136,100
Intensive	$504,500

Working

	Cost Assigned
Normal	=+(6900*4)+(5300*5)+(32000*2)+(6000*3)
Intensive	=+(9500*4)+(18100*5)+(80000*2)+(72000*3)

• [2]

Normal	$17.01	per patient day
Intensive	$78.83	per patient day

Working

Normal	=136100/8000	per patient day
Intensive	=504500/6400	per patient day

• Requirement [3]

Total Cost	$640,600	[$136100 + 504500]
Total Patient days	14400	[8000 + 6400]
Cost per patient day = $ 640600 / 14400	$44.49	per patient day = ANSWER