Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 26, Problem 26.4APR
Pareto chart and cost of quality report for a service company
The administrator of Hope Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows:
| Activities | Activity Cost |
| Patient registration | $ 6,400 |
| Verifying patient information | 9,600 |
| Assigning patients | 12,800 |
| Searching/waiting for doctor | 8,000 |
| Doctor exam | 4,800 |
| Waiting for transport | 17,600 |
| Transporting patients | 16,000 |
| Verifying lab orders | 14,400 |
| Searching for equipment | 8,000 |
| Incorrect labs | 12,800 |
| Lab tests | 17,600 |
| Counting supplies | 19,200 |
| Looking for supplies | 8,000 |
| Staff training | 4,800 |
| Total | $160,000 |
Instructions
1. Prepare a Pareto chart of the ER activities.
2. Classify the activities into prevention, appraisal, internal failure, external failure, and other patient care activities. Classify the activities into value-added and non-value-added activities.
3. Use the activity cost information to determine the percentages of total ER costs that are prevention, appraisal, internal failure, external failure, and other patient care activities.
4. Determine the percentages of the total ER costs that are value-added and non-value-added.
5. Interpret the information.
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Pareto chart and cost of quality report for a service company
The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows:
Activities
Activity Cost
Patient registration
$ 6,500
Verifying patient information
9,700
Assigning patients
13,000
Searching/waiting for doctor
9,200
Doctor exam
4,900
Waiting for transport
17,500
Transporting patients
16,200
Verifying lab orders
14,500
Searching for equipment
8,200
Incorrect labs
11,300
Lab tests
17,000
Counting supplies
19,000
Looking for supplies
8,200
Staff training
4,800
Total
$160,000
a.
b.
c.
d.
Classify the…
Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients:
Treating patients
Providing hygienic care
Responding to requests
Monitoring patients
Required:
Normal
Intensive
Driver
Normal
Treatments
Intensive
Hygienic hours
Requests
Monitoring hours
Patient Category
Normal Intensive
7,900
1. Determine the total nursing costs assigned to each patient category.
Costs Assigned
per patient day
per patient day
4,800
32,000
6,000
8,000
19,100
80,000
72,000
Activity Rate
$4.00
5.00
2. Output is measured in patient days. Assuming that the normal patient category uses 8,000 patient days and the intensive patient
category uses 6,400 patient days, calculate the nursing cost per patient day for each type of patient. Round your answers to the nearest
cent.
2.00
3.00
Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR's management wants to compute the costs of performing tests for two different types of patients: those who are hospitalized (including those in emergency rooms) and those who are not hospitalized but are referred by physicians. The data for June for the two categories of patients follow.
Hospital Patients
Other Patients
Total
Units (i.e., procedures) produced
660
810
1,470
Equipment-hours used
220
150
370
Direct labor-hours
480
170
650
Direct labor costs
$
38,400
$
10,200
$
48,600
Overhead costs
$
48,500
The accountant first assigns overhead costs to two pools: overhead related to equipment-hours and overhead related to labor-hours. The analysis of overhead accounts by the cost accountant follows.
Account
Amount
Related to:
Utilities
$
4,860
Equipment-hours
Supplies…
Chapter 26 Solutions
Financial & Managerial Accounting
Ch. 26 - Prob. 1DQCh. 26 - Prob. 2DQCh. 26 - Why is a product-oriented layout preferred by lean...Ch. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Why would a lean manufacturer strive to produce...Ch. 26 - Prob. 7DQCh. 26 - Prob. 8DQCh. 26 - Prob. 9DQCh. 26 - Why is the direct labor cost category eliminated...
Ch. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Prob. 13DQCh. 26 - Lead time Rough Riders Inc. manufactures jeans in...Ch. 26 - Lean features Which of the following are features...Ch. 26 - Lean accounting The annual budgeted conversion...Ch. 26 - Cost of quality report A quality control activity...Ch. 26 - Process activity analysis Roen Company incurred an...Ch. 26 - Prob. 26.1EXCh. 26 - Prob. 26.2EXCh. 26 - Lean principles Active Apparel Company...Ch. 26 - Lead time analysis Palm Pals Inc. manufactures toy...Ch. 26 - Reduce setup time Hammond Inc. has analyzed the...Ch. 26 - Calculate lead time Flint Fabricators Int....Ch. 26 - Calculate lead time Williams Optical Inc. is...Ch. 26 - Prob. 26.8EXCh. 26 - Prob. 26.9EXCh. 26 - Lean principles for a restaurant The management of...Ch. 26 - Prob. 26.11EXCh. 26 - Lean accounting Westgate Inc. uses a lean...Ch. 26 - Lean accounting Modern Lighting Inc. manufactures...Ch. 26 - Lean accounting Vintage Audio Inc. manufactures...Ch. 26 - Pareto chart Meagher Solutions Inc. manufacture....Ch. 26 - Prob. 26.16EXCh. 26 - Pareto chart for a service company Three Rivers...Ch. 26 - Cost of quality and value-added/non-value-added...Ch. 26 - Process activity analysis The Brite Beverage...Ch. 26 - Process activity analysis for a service company...Ch. 26 - Prob. 26.21EXCh. 26 - Prob. 26.1APRCh. 26 - Lead time Sound Tek Inc. manufactures electronic...Ch. 26 - Lean accounting Dashboard Inc. manufactures and...Ch. 26 - Pareto chart and cost of quality report for a...Ch. 26 - Prob. 26.1BPRCh. 26 - Lead time Master Chef Appliance Company...Ch. 26 - Lean accounting Com-Tel Inc. manufactures and...Ch. 26 - Pareto chart and cost of quality report for a...Ch. 26 - Prob. 1ADMCh. 26 - Turn around time in an operating room of a...Ch. 26 - Prob. 3ADMCh. 26 - Ethics in Action In August, Lannister Company...Ch. 26 - Prob. 26.3TIF
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