Itranscript Problem 17-5A (Algo) Activity-based costing for a service company LO P4 Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Budgeted Activity Usage 12,000 800 3,300 Activity Budgeted Cost Activity Cost Driver $ 2,304,000 Supplies Surgical hours (SH) Patient services 52,000 396,000 Number of patients Square feet Building cost The two main surgical units and their actual activity usage follow. Actual Activity Usage Service General surgery Orthopedic surgery Surgical Hours 3,800 8,200 Patients 600 200 Square Feet 850 2,450 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.
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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