Calculate the per unit cost of an intensive visit using the conventional approach. Calculate the per unit cost of an intensive visit using the ABC approach. Exhibit 12-13Data for cost allocation in Problem 13 Basic data and calculation of unit costs using a conventional approach Total Cost by Visit Type Basic Data A B C D Initial Regular Intensive Total (Given) (Given) (Given) (A + B + C) 1 Number of visits 5,000 10,000 5,000 20,000 2 Direct materials (etc.) $21,000 $14,000 $35,000 $70,000 3 Direct labor $80,000 $80,000 $240,000 $400,000 4 Estimated overhead (total is a given) $150,000 5 Cost / visit: conventional method Additional basic data 1) Basic data: annual projections of overhead costs by activity Cost Driver Information Activity I J K Cost Driver Units (Given) (Given) (Given) 6 Intake $22,500 New visits 2,500 New visits 7 Medical records $22,500 Time spent 2,040 Hours 8 Billing $45,000 Time spent 4,080 Hours 9 Other $60,000 Visits 20,000 Visits 10 Total $150,000 2) Basic data: actual annual operating results of cost drivers to be used to assign ABC overhead cost Visit Type M N O P Initial Regular Intensive Total (Given) (Given) (Given) (M + N + O) 11 New visits 1,500 750 250 2,500 12 Medical records 204 612 1,224 2,040 13 Billing 2,040 816 1,224 4,080 14 Other 5,000 10,000 5,000 20,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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- Calculate the per unit cost of an intensive visit using the conventional approach.
- Calculate the per unit cost of an intensive visit using the ABC approach.
Exhibit 12-13Data for cost allocation in Problem 13
Basic data and calculation of unit costs using a conventional approach
Total Cost by Visit Type
Basic Data
A
B
C
D
Initial
Regular
Intensive
Total
(Given)
(Given)
(Given)
(A + B + C)
1
Number of visits
5,000
10,000
5,000
20,000
2
Direct materials (etc.)
$21,000
$14,000
$35,000
$70,000
3
Direct labor
$80,000
$80,000
$240,000
$400,000
4
Estimated
overhead (total is a given)$150,000
5
Cost / visit: conventional method
Additional basic data
1) Basic data: annual projections of overhead costs by activity
Cost Driver Information
Activity
I
J
K
Cost
Driver
Units
(Given)
(Given)
(Given)
6
Intake
$22,500
New visits
2,500
New visits
7
Medical records
$22,500
Time spent
2,040
Hours
8
Billing
$45,000
Time spent
4,080
Hours
9
Other
$60,000
Visits
20,000
Visits
10
Total
$150,000
2) Basic data: actual annual operating results of cost drivers to be used to assign ABC overhead cost
Visit Type
M
N
O
P
Initial
Regular
Intensive
Total
(Given)
(Given)
(Given)
(M + N + O)
11
New visits
1,500
750
250
2,500
12
Medical records
204
612
1,224
2,040
13
Billing
2,040
816
1,224
4,080
14
Other
5,000
10,000
5,000
20,000
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