Question

Activity-Based Costing for a Service Company per test 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 $184 per day Radiology $259 per image Pharmacy $48 per physician order Chemistry lab $93 Operating room $680 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 3 days 8 days Number of images 4 images 5 images Number of physician orders 5 orders 7 orders Number of tests 3 tests 6 tests Number of operating room hours 2 hours 7 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.

Total Activity Costs:
	Total Activity Costs
Abel Putin	$                        3,467
Cheryl Umit	$                        8,421

Activity Cost Pools	Cost drivers	Activity rate	Activity level	OH COST
Room and Meals	Number of days	$        184.00	11	$     2,024
Radiology	Number of Images	$        259.00	9	$     2,331
Pharmacy	Number of Physician Orders	$          48.00	12	$        576
Chemical Lab	Number of Tests	$          93.00	9	$        837
Operating Room	Number of Operating Room hours	$        680.00	9	$     6,120
				$ 11,888

	Abel Putin	Cheryl Umit
Activity Cost Pools	Estimated Use of Drivers	Activity-Based OH Rate	Cost Assigned	Estimated Use of Drivers	Activity-Based OH Rate	Cost Assigned
Room and Meals	3	$            184.00	$                552	8	$            184.00	$             1,472
Radiology	4	$            259.00	$             1,036	5	$            259.00	$             1,295
Pharmacy	5	$               48.00	$                240	7	$               48.00	$                336
Chemical Lab	3	$               93.00	$                279	6	$               93.00	$                558
Operating Room	2	$            680.00	$             1,360	7	$            680.00	$             4,760
Total Costs assigned			$            3,467			$            8,421

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 the Other patient.

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