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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96ccea39-6e20-4e83-b9fb-b22d2ae10407%2Fc97bcee4-91a8-4d20-98ce-8d8803aea150%2Fioz4wl_processed.png&w=3840&q=75)
Transcribed Image Text: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.
![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. Compute activity rates using activity-based costing.
Activity
Budgeted Cost
$ 2,310,000
39,000
294,000
Supplies
Patient services
Building cost
General surgery
Supplies
Patient services
Building cost
Orthopedic Surgery
Supplies
Patient services
Building cost
Budgeted Activity Usage
11,000 surgical hours
Overhead cost per patient
21,000 square feet
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery
unit.
-----Activity Usage-----
2,600 surgical hours
300 patients
720 square feet
500 number of patients
-----Activity Usage-----
8,400 surgical hours
200 patients
1,380 square feet
-----Activity rate-----
per surgical hour
per patient
per square foot
-----Activity rate-----
Activity Rate
per surgical hour
per patient
per square foot
per surgical hour
per patient
per surgical hour
Allocated Cost
Allocated Cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96ccea39-6e20-4e83-b9fb-b22d2ae10407%2Fc97bcee4-91a8-4d20-98ce-8d8803aea150%2Fo4k45hi_processed.png&w=3840&q=75)
Transcribed Image Text: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. Compute activity rates using activity-based costing.
Activity
Budgeted Cost
$ 2,310,000
39,000
294,000
Supplies
Patient services
Building cost
General surgery
Supplies
Patient services
Building cost
Orthopedic Surgery
Supplies
Patient services
Building cost
Budgeted Activity Usage
11,000 surgical hours
Overhead cost per patient
21,000 square feet
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery
unit.
-----Activity Usage-----
2,600 surgical hours
300 patients
720 square feet
500 number of patients
-----Activity Usage-----
8,400 surgical hours
200 patients
1,380 square feet
-----Activity rate-----
per surgical hour
per patient
per square foot
-----Activity rate-----
Activity Rate
per surgical hour
per patient
per square foot
per surgical hour
per patient
per surgical hour
Allocated Cost
Allocated Cost
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