2 Activity-based costing for a service companyCrosswinds 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:ActivityActivity RateRoom and meals$177 per dayRadiology$250 per imagePharmacy$48 per physician orderChemistry lab$87 per testOperating room$860 per operating room hourThe activity usage information associated with the two patients is as follows:Abel PutinCheryl UmitNumber of days10 days.Number of images8 imagesNumber of physician orders7 ordersNumber of tests7 testsNumber of operating room hours7 hoursThis information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.XOpen spreadsheet4 days4 images5 orders.4 tests2.5 hoursa. Determine the activity cost associated with each patient.Abel Putin sCheryl 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 tois more than the activity cost of the other patient.

Under activity-based costing method, the cost is allocated to each activity based on its…

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 $177 per day Radiology $250 per image Pharmacy $48 per physician order Chemistry lab $87 per test Operating room $860 per operating room hour The activity usage information associated with the two patients is as follows: Cheryl Umit Abel Putin 4 days 10 days 4 images 8 images 5 orders 7 orders 4 tests 2.5 hours Number of days Number of images Number of physician orders Number of tests 7 tests Number of operating room hours 7 hours This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the activity cost associated with each patient. Abel Putin s Cheryl Umit s 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.

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 $177 per day Radiology $250 per image Pharmacy $48 per physician order Chemistry lab $87 per test Operating room $860 per operating room hour The activity usage information associated with the two patients is as follows: Cheryl Umit Abel Putin 4 days 10 days 4 images 8 images 5 orders 7 orders 4 tests 2.5 hours Number of days Number of images Number of physician orders Number of tests 7 tests Number of operating room hours 7 hours This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the activity cost associated with each patient. Abel Putin s Cheryl Umit s 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.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5MAD

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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
$177 per day
Radiology
$250 per image
Pharmacy
$48 per physician order
Chemistry lab
$87 per test
Operating room
$860 per operating room hour
The activity usage information associated with the two patients is as follows:
Abel Putin
Cheryl Umit
Number of days
10 days.
Number of images
8 images
Number of physician orders
7 orders
Number of tests
7 tests
Number of operating room hours
7 hours
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
X
Open spreadsheet
4 days
4 images
5 orders.
4 tests
2.5 hours
a. Determine the activity cost associated with each patient.
Abel Putin s
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.

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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: The activity usage information associated with the two patients is as follows: Determine the activity cost associated with each patient. Why is the total activity cost different for the two patients?
Product costing and decision analysis for a service company Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its products. The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: Total patient days are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a four-day stay in the hospital.) During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows: Private insurance reimburses the hospital for these activities at a fixed daily rate of 406 per patient day for all three procedures. Instructions Determine the activity rates. Determine the activity cost for each procedure. Determine the excess or deficiency of reimbursements to activity cost. Interpret your results.
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 $176 per day Radiology $248 per image Pharmacy $38 per physician order Chemistry lab $96 per test Operating room $760 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 5 days 11 days Number of images 4 images 5 images Number of physician orders 7 orders 9 orders Number of tests 2 tests 5 tests Number of operating room hours 3 hours 6.5 hours a. Determine the activity cost associated with each patient. Abel Putin $fill in the blank 1 Cheryl Umit $fill in the blank 2 b. Why is the total activity cost different for the two patients? apparently had a…
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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:
ces Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Activity Supplies Service General surgery Orthopedic surgery Patient services Building cost The two main surgical units and their actual activity usage follow. Actual Activity Usage Square Feet 750 Activity Budgeted Cost $ Supplies Patient services Building cost 2,700,000 30,000 368,000 Surgical Hours 2,800 12, 200 Supplies Patient services Building cost Activity Cost Driver Surgical hours (SH) Number of Orthopedic Surgery Supplies Patient services Building cost patients Square feet Patients 300 1. Compute activity rates using activity-based costing. Budgeted Cost 100 Required: 1. Compute activity rates using activity-based costing. 2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit. 1,550 Budgeted Activity Usage 15,000 400 2,300 Budgeted Activity Usage 2.…
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