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 Cost Activity Cost Driver Budgeted Activity Usage $ 2,520,000 Surgical hours (SH) 10,000 Number of patients 600 Square feet. 3,500 Activity Supplies Patient services 39,000 Building cost 441,000 The two main surgical units and their actual activity usage follow. Service Surgical Hours General surgery 4,000 Orthopedic surgery 6,000 Actual Activity Usage Patients Supplies Patient services Building cost Square Feet 450 1. Compute activity rates using activity-based costing. Activity Budgeted Cost General surgery Supplies Patient services Building cost 150 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. Orthopedic Surgery Supplies Patient services Building cost 800 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----- Overhead cost per patient 2,700 Budgeted Activity Usage -----Activity Usage----- -----Activity rate----- Activity Rate -----Activity rate--...- Allocated Cost Allocated Cost
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 Cost Activity Cost Driver Budgeted Activity Usage $ 2,520,000 Surgical hours (SH) 10,000 Number of patients 600 Square feet. 3,500 Activity Supplies Patient services 39,000 Building cost 441,000 The two main surgical units and their actual activity usage follow. Service Surgical Hours General surgery 4,000 Orthopedic surgery 6,000 Actual Activity Usage Patients Supplies Patient services Building cost Square Feet 450 1. Compute activity rates using activity-based costing. Activity Budgeted Cost General surgery Supplies Patient services Building cost 150 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. Orthopedic Surgery Supplies Patient services Building cost 800 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----- Overhead cost per patient 2,700 Budgeted Activity Usage -----Activity Usage----- -----Activity rate----- Activity Rate -----Activity rate--...- Allocated Cost Allocated Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text: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 Cost Activity Cost Driver Budgeted Activity Usage
$ 2,520,000
Surgical hours (SH)
10,000
Number of patients
600
Square feet
3,500
Activity
Supplies
Patient services 39,000
Building cost 441,000
The two main surgical units and their actual activity usage follow.
Service
Surgical Hours
General surgery
4,000
Orthopedic surgery 6,000
Actual Activity Usage
Patients
Supplies
Patient services
Building cost
Square Feet
450
1. Compute activity rates using activity-based costing.
Activity
Budgeted Cost
General surgery
Supplies
Patient services
Building cost
150
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.
Orthopedic Surgery
Supplies
Patient services
Building cost
800
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-----
Overhead cost per patient
2,700
Budgeted Activity Usage
-----Activity Usage-----
-----Activity rate-----
Activity Rate
-----Activity rate-....
Allocated Cost
Allocated Cost
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