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DBC, TDABC, and ABC The Bienestar Cardiology Clinic has two major activities: diagnostic and treatment. The two activities use four resources: nursing, medical technicians, cardiologists, and equipment. Detailed interviews have provided the following work distribution matrix shown below. Resources Activity Nursing Technicians Cardiologists Equipment Total Activity Time Diagnosing patients 0.70 0.80 0.40 0.60 12,000 hrs. Treating patients 0.30 Total time (hrs.) 0.20 0.60 0.40 8,000 hrs. 4,000 4,000 6,000 6,000 20,000 Cost $80,000 $80,000 $320,000 $320,000 The total time estimated corresponds to practical capacity (interviewers adjusted the total time to about 80 percent of the available time). The equipment time is measured in machine hours. Thus, the total time (at practical capacity) in the system is 20,000 hours. In considering the implementation of a TDABC model, the following unit times and transaction information are also provided: Unit Time Diagnosing patients 3 hrs Treating patients 0.8 hr. Driver Expected Activity Driver Quantity No. of patients 4,000 No. of treatments 10,000 The clinic has identified three types of patients: those with no heart disease, those with mild heart disease, and those with severe heart disease. The following additional data are provided: Average Time Spent Servicing Diagnosing Patients Treating Patients Each Patlent Type (Cycle Time) Patient Type No disease Mild disease 2,000 0 3 hrs. 1,500 5,000 5.6 hrs. Severe disease 500 5,000 11.0 hrs. ? Activity cost ? Required: Required: 1. Calculate the activity costs for diagnosing and treating patients. Using the activity costs calculated, calculate the unit cost of servicing each type of patient using traditional ABC. Activity rates Diagnosing Sfill in the blank 1 Treating Sfill in the blank 2 Calculate the unit cost of servicing each type of patient using traditional ABC. Unit Cost No Disease $fill in the blank 3 Mild $fill in the blank 4 Severe $fill in the blank 5

DBC, TDABC, and ABC The Bienestar Cardiology Clinic has two major activities: diagnostic and treatment. The two activities use four resources: nursing, medical technicians, cardiologists, and equipment. Detailed interviews have provided the following work distribution matrix shown below. Resources Activity Nursing Technicians Cardiologists Equipment Total Activity Time Diagnosing patients 0.70 0.80 0.40 0.60 12,000 hrs. Treating patients 0.30 Total time (hrs.) 0.20 0.60 0.40 8,000 hrs. 4,000 4,000 6,000 6,000 20,000 Cost $80,000 $80,000 $320,000 $320,000 The total time estimated corresponds to practical capacity (interviewers adjusted the total time to about 80 percent of the available time). The equipment time is measured in machine hours. Thus, the total time (at practical capacity) in the system is 20,000 hours. In considering the implementation of a TDABC model, the following unit times and transaction information are also provided: Unit Time Diagnosing patients 3 hrs Treating patients 0.8 hr. Driver Expected Activity Driver Quantity No. of patients 4,000 No. of treatments 10,000 The clinic has identified three types of patients: those with no heart disease, those with mild heart disease, and those with severe heart disease. The following additional data are provided: Average Time Spent Servicing Diagnosing Patients Treating Patients Each Patlent Type (Cycle Time) Patient Type No disease Mild disease 2,000 0 3 hrs. 1,500 5,000 5.6 hrs. Severe disease 500 5,000 11.0 hrs. ? Activity cost ? Required: Required: 1. Calculate the activity costs for diagnosing and treating patients. Using the activity costs calculated, calculate the unit cost of servicing each type of patient using traditional ABC. Activity rates Diagnosing Sfill in the blank 1 Treating Sfill in the blank 2 Calculate the unit cost of servicing each type of patient using traditional ABC. Unit Cost No Disease $fill in the blank 3 Mild $fill in the blank 4 Severe $fill in the blank 5

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter13: Lean Manufacturing And Activity Analysis
Section: Chapter Questions
Problem 4PA: Pareto chart and cost of quality report for a service company The administrator of Liberty Hospital...
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DBC, TDABC, and ABC The Bienestar Cardiology Clinic has two major activities: diagnostic and treatment. The two activities use four resources: nursing, medical technicians, cardiologists, and equipment. Detailed interviews have provided the following work distribution matrix shown below. Resources Activity Nursing Technicians Cardiologists Equipment Total Activity Time Diagnosing patients 0.70 0.80 0.40 0.60 12,000 hrs. Treating patients 0.30 Total time (hrs.) 0.20 0.60 0.40 8,000 hrs. 4,000 4,000 6,000 6,000 20,000 Cost $80,000 $80,000 $320,000 $320,000 The total time estimated corresponds to practical capacity (interviewers adjusted the total time to about 80 percent of the available time). The equipment time is measured in machine hours. Thus, the total time (at practical capacity) in the system is 20,000 hours. In considering the implementation of a TDABC model, the following unit times and transaction information are also provided: Unit Time Diagnosing patients 3 hrs Treating patients 0.8 hr. Driver Expected Activity Driver Quantity No. of patients 4,000 No. of treatments 10,000 The clinic has identified three types of patients: those with no heart disease, those with mild heart disease, and those with severe heart disease. The following additional data are provided: Average Time Spent Servicing Diagnosing Patients Treating Patients Each Patlent Type (Cycle Time) Patient Type No disease Mild disease 2,000 0 3 hrs. 1,500 5,000 5.6 hrs. Severe disease 500 5,000 11.0 hrs. ? Activity cost ? Required:
Transcribed Image Text:DBC, TDABC, and ABC The Bienestar Cardiology Clinic has two major activities: diagnostic and treatment. The two activities use four resources: nursing, medical technicians, cardiologists, and equipment. Detailed interviews have provided the following work distribution matrix shown below. Resources Activity Nursing Technicians Cardiologists Equipment Total Activity Time Diagnosing patients 0.70 0.80 0.40 0.60 12,000 hrs. Treating patients 0.30 Total time (hrs.) 0.20 0.60 0.40 8,000 hrs. 4,000 4,000 6,000 6,000 20,000 Cost $80,000 $80,000 $320,000 $320,000 The total time estimated corresponds to practical capacity (interviewers adjusted the total time to about 80 percent of the available time). The equipment time is measured in machine hours. Thus, the total time (at practical capacity) in the system is 20,000 hours. In considering the implementation of a TDABC model, the following unit times and transaction information are also provided: Unit Time Diagnosing patients 3 hrs Treating patients 0.8 hr. Driver Expected Activity Driver Quantity No. of patients 4,000 No. of treatments 10,000 The clinic has identified three types of patients: those with no heart disease, those with mild heart disease, and those with severe heart disease. The following additional data are provided: Average Time Spent Servicing Diagnosing Patients Treating Patients Each Patlent Type (Cycle Time) Patient Type No disease Mild disease 2,000 0 3 hrs. 1,500 5,000 5.6 hrs. Severe disease 500 5,000 11.0 hrs. ? Activity cost ? Required:
Required: 1. Calculate the activity costs for diagnosing and treating patients. Using the activity costs calculated, calculate the unit cost of servicing each type of patient using traditional ABC. Activity rates Diagnosing Sfill in the blank 1 Treating Sfill in the blank 2 Calculate the unit cost of servicing each type of patient using traditional ABC. Unit Cost No Disease $fill in the blank 3 Mild $fill in the blank 4 Severe $fill in the blank 5
Transcribed Image Text:Required: 1. Calculate the activity costs for diagnosing and treating patients. Using the activity costs calculated, calculate the unit cost of servicing each type of patient using traditional ABC. Activity rates Diagnosing Sfill in the blank 1 Treating Sfill in the blank 2 Calculate the unit cost of servicing each type of patient using traditional ABC. Unit Cost No Disease $fill in the blank 3 Mild $fill in the blank 4 Severe $fill in the blank 5
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