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 $281 per day Radiology $396 per image Pharmacy $49 per physician order Chemistry lab $71 per test Operating room $960 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 2 days 8 days Number of images 5 images 5 images Number of physician orders 4 orders 6 orders Number of tests 2 tests 5 tests Number of operating room hours 2.5 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

1.)
a.)		Abel Putin	Cheryl Umit
	Room & Meals	562	2,248
	Radiology	1,980	1,980
	Pharmacy	196	294
	Chemistry lab	142	355
	Operating room	2,400	6,720
	Total activity Cost $	5,280	11,597

b.)   Cheryl Umit apparently had a different condition that required more extenive treatment. Thus the acivity cost to Cheryl Umit is more than the activity cost of the other patient.

2.)		October	November	December
	Receipts from Cash Sales
	Cash Sales	26,200	32,800	48,000
	September sales on account
	Collected in October	88,000
	October sales on account
	Collected in October	26,200
	Collected in November		78,600
	November sales on account
	Collected in November	-	32,800
	Collected in December			98,400
	December sales on account
	Collected in December			48,000
	Total Cash receipts	140,400	144,200	194,400