Beckley Hill (BH) is a private hospital carrying out two types of procedures on patients. Each type of procedure incursthe following direct costs:ProcedureAB$1,200800$Surgical time and materials2,640Anaesthesia time and materials1,620BH currently calculates the overhead cost per procedure by taking the total overhead cost and simply dividing it bythe number of procedures, then rounding the cost to the nearest 2 decimal places. Using this method, the total costis $2,475-85 for Procedure A and $4,735-85 for Procedure B.Recently, another local hospital has implemented activity-based costing (ABC). This has led the finance director at BHto consider whether this alternative costing technique would bring any benefits to BH. He has obtained an analysisof BH's total overheads for the last year and some additional data, all of which is shown below:$1,870,1606,215,616966,9768,553,600CostCost driverAdministrative costsNursing costsCatering costsGeneral facility costsAdministrative time per procedureLength of patient stayNumber of mealsLength of patient stayTotal overhead costs17,606,352ProcedureANo. of proceduresAdministrative time per procedure (hours)Length of patient stay per procedure (hours)Average no. of meals required per patient14,60022,40011-5244814Required1. Calculate overhead cost rate for each activity2. Calculate overhead cost applied for each procedure3. Calculate total cost for each procedure

Given: The table is shown below as,

Beckley Hill (BH) is a private hospital carrying out two types of procedures on patients. Each the following direct costs: Procedure A в $ 1,200 2,640 1,620 Surgical time and materials Anaesthesia time and materials 800 BH currently calculates the overhead cost per procedure by taking the total overhead cost a the number of procedures, then rounding the cost to the nearest 2 decimal places. Using th is $2,475-85 for Procedure A and $4,735-85 for Procedure B. Recently, another local hospital has implemented activity-based costing (ABC). This has led th to consider whether this alternative costing technique would bring any benefits to BH. He h of BH's total overheads for the last year and some additional data, all of which is shown bel

Beckley Hill (BH) is a private hospital carrying out two types of procedures on patients. Each the following direct costs: Procedure A в $ 1,200 2,640 1,620 Surgical time and materials Anaesthesia time and materials 800 BH currently calculates the overhead cost per procedure by taking the total overhead cost a the number of procedures, then rounding the cost to the nearest 2 decimal places. Using th is $2,475-85 for Procedure A and $4,735-85 for Procedure B. Recently, another local hospital has implemented activity-based costing (ABC). This has led th to consider whether this alternative costing technique would bring any benefits to BH. He h of BH's total overheads for the last year and some additional data, all of which is shown bel

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rupert’s Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. The finance team at RAW has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow: Activity Cost Driver Activity Cost Cost Driver Volume Processing order Number of orders $ 42,000 3,000 orders Loading truck Number of items 171,000 95,000 items Delivering order Number of orders 51,000 3,000 orders Billing Number of invoices 34,000 2,000 invoices Total overhead $ 298,000 Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers follow: McLean Designs Neveux Appliances Order value (total) $ 76,000 $ 86,000 Number of orders 56 136 Total number of items 400 1,600 Number of invoices 10 130…
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Zamboanga Hospital plans to use the 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: (Refer to image) Determine the activity cost associated with Patient 2. a. P1,388 b. P 908 c. P1,816 d. P4,555
Hamilton, a decorative wall clock manufacturer uses activity-based costing. Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information is as follows: Activity Materials handling Number of parts Machining Machine hours Assembling Packaging What is the cost of machining per clock? Multiple Choice $144.00 Allocation Base $180.00 Number of parts Number of finished clocks Cost Allocation Rate $ 0.08 7.20 0.35 2.70
Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Budgeted Activity Activity Supplies Patient services Activity Cost Driver Surgical hours (SH) Number of patients Square feet Building cost The two main surgical units and their actual activity usage follow. Actual Activity Usage Budgeted Cost $ 2,310,000 39,000 294,000 Service General surgery Orthopedic surgery Surgical Hours 2,600 8,400 Patients 300 200 Square Feet 720 1,380 Usage 11,000 500 2,100 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.
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Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8.10 per guest check-in, $24.00 per room cleaning, and $4.00 per served meal (not including food). Tara Stone visited the hotel for a 4-night stay. Tara had 5 meals in the hotel during the visit. Determine the total activity-based cost for Stone's visit during the month. Round your answer to the nearest cent.$fill in the blank 1
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Using the sequential method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. It has determined to allocate Janitorial costs before Cafeteria costs. It has the following information about its two service departments and two production departments, Cutting and Assembly: Number of Employees 20 10 60 20 Costs Janitorial Department $450,000 Cafeteria Department 200,000 Cutting Department 1,500,000 Assembly Department 3,000,000 Square Feet 100 10,000 2,000 8,000 The percentage (proportional) usage of the Janitorial Department by the Cutting Department is Oa. 20% Ob. 9.9% Oc. 80% Od. 10%
To compute a daily rate that reflected the difference in demands, patients were placed in three categories according to illness severity, and the following annual data were collected: Cost of Activity Activity Driver $ 546,780 2,132,200 441,630 4,185,700 $7,306,310 Activity Lodging Monitoring Feeding Nursing care Total The demands associated with patient severity are also provided: Severity Patient Days Monitoring Hours Nursing Hours High Medium Low 7,170 10,180 3,680 $ Patient days Monitoring hours used Patient days Nursing hours High severity Medium severity Low severity 15,170 12,030 3,260 133,100 72,900 14,300 Required: 1. Suppose that the costs of daily care are assigned using only patient days as the activity driver (which is also the measure of output). Compute the daily rate using this unit-based approach of cost assignment. If required, round your answer to the nearest cent. per day 2. Compute activity rates using the given activity drivers (combine activities with the same…