Question

Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $289 per day $407 per image Radiology Pharmacy Chemistry lab $41 per physician order $81 per test $880 per operating room hour Operating room The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 8 days 5 days 2 images 5 orders Number of images Number of physician orders 5 images 7 orders Number of tests 2 tests 5 tests Number of operating room hours 2 hours 6 hours a. Determine the activity cost associated with each patient. Abel Putin $ Cheryl Umit b. Why is the total activity cost different for the two patients? apparently had a different condition that required more extensive treatment. Thus, the activity cost to is more than the activity cost of the other patient.

Answer 1

a
Abel Putin	4386
Cheryl Umit	10319

b

Cheryl Umit apparently had a different condition that required more extensive treatment.Thus, the activity cost to Cheryl Umit is more than the activity cost of other patient.

Workings:
Abel Putin
Activity	Activity usage	Activity rate	Activity cost
Room and meals	5	289	1445
Radiology	2	407	814
Pharmacy	5	41	205
Chemistry lab	2	81	162
Operating room	2	880	1760
		Total	4386
Cheryl Umit
Activity	Activity usage	Activity rate	Activity cost
Room and meals	8	289	2312
Radiology	5	407	2035
Pharmacy	7	41	287
Chemistry lab	5	81	405
Operating room	6	880	5280
		Total	10319