ActivitySuppliesPatient servicesBuilding costBudgeted Cost$ 2,865,000Activity Cost DriverUsage33,000368,000Surgical hours (SH)Number of patientsSquare feet15,0005003,200The two main surgical units and their actual activity usage follow.Actual Activity UsageSurgicalServiceHoursGeneral surgery3,600Patients400Square FeetOrthopedic surgery11,4001008002,400Required: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 eachsurgery unit.1. Compute activity rates using activity-based costing.ActivitySuppliesPatient servicesBuilding costBudgeted CostBudgeted Activity UsageActivity Rate

Name: ActivitySuppliesPatient servicesBuilding costBudgeted Cost$ 2,865,000
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Description: ActivitySuppliesPatient servicesBuilding costBudgeted Cost$ 2,865,000Activity Cost DriverUsage33,000368,000Surgical hours (SH)Number of patientsSquare feet15,0005003,200The two main surgical units and their actual activity usage follow.Actual Activi

Activity-based costing is quite a useful method to allocate the overhead cost to products in an…

Business

Accounting

Activity Supplies Patient services Building cost Budgeted Cost $ 2,865,000 Activity Cost Driver Usage 33,000 368,000 Surgical hours (SH) Number of patients Square feet 15,000 500 3,200 The two main surgical units and their actual activity usage follow. Actual Activity Usage Surgical Service Hours General surgery 3,600 Patients 400 Square Feet 800 Orthopedic surgery 11,400 100 2,400 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

Activity Supplies Patient services Building cost Budgeted Cost $ 2,865,000 Activity Cost Driver Usage 33,000 368,000 Surgical hours (SH) Number of patients Square feet 15,000 500 3,200 The two main surgical units and their actual activity usage follow. Actual Activity Usage Surgical Service Hours General surgery 3,600 Patients 400 Square Feet 800 Orthopedic surgery 11,400 100 2,400 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

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5MAD

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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 work distribution matrix shown below. 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: Required: 1. Calculate the cost of each activity using the indicated values of the resource drivers. 2. Calculate the capacity cost rate for TDABC. Using the capacity cost rate, calculate the cost of each activity under TDABC. Compare these values with those obtained in Requirement 1 and discuss possible reasons for any differences. 3. Suppose that the actual activity driver quantities are 3,500 and 9,000. Calculate the cost of unused capacity. 4. Suppose that the clinic acquires new equipment that reduces the total time required for the two activities from 6,000 to 4,000 hours. The equipment cost remains the same. Explain how the ABC system would be updated and then describe how TDABC would provide updates. 5. Suppose that diagnosing patients without any cardiac disease takes two hours while diagnosing patients with mildly diseased hearts takes an additional 1.5 hours and those with more severe problems takes an additional two hours. Prepare a time equation and, using the capacity cost rate from Requirement 2, calculate the activity rate for each of the three types of patients.
Part (two). The following information relates to the wards in the cardiology department of Good Health Hospital for one accounting period Wards 1 2 3 Number of Beds 12 10 20 Total number of Patients 48 32 108 Total ward staff (excluding consultants) 8 8 12 Ward staff – full-time equivalent 5 4 6 Variable operating costs for period £58,000 £66,000 £98,000 Operating fixed costs £85,000 £67,000 £88,000 General overhead costs £40,000 £40,000 £40,000 General overhead costs are made up of recharges from support services. The total cost of £120,000 is split equally between the three wards. The hospital manager is concerned about the high costs of running the three heart-care wards. She has asked you to investigate their performance. Question Write a report which investigates the costs of operating the three hospital wards. Your report should include appropriate measures of performance for each ward and you…
Activity-Based Product Costing Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients: Patient Category Driver Normal Intensive Activity Rate Treating patients Treatments 7,400 9,500 $4.00 Providing hygienic care Hygienic hours 5,300 18,600 5.00 Responding to requests Requests 32,000 80,000 2.00 Monitoring patients Monitoring hours 6,000 72,000 3.00 Required: 1. Determine the total nursing costs assigned to each patient category. Costs Assigned Normal $fill in the blank 1 Intensive $fill in the blank 2 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. Normal $fill in the blank 3 per patient day Intensive $fill in the blank 4 per patient day 3. Conceptual…
Activity-Based Product Costing Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients: Patient Category Driver Normal Intensive Activity Rate Treating patients Treatments 6,400 8,000 $4.00 Providing hygienic care Hygienic hours 4,800 17,600 5.00 Responding to requests Requests 32,000 80,000 2.00 Monitoring patients Monitoring hours 6,000 72,000 3.00 Required: 1. Determine the total nursing costs assigned to each patient category. Costs Assigned Normal $ Intensive $ 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 to two decimal places.) Normal $ per patient day Intensive $ per patient day 3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient…
Activity-Based Product Costing Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients: Patient Category Driver Normal Intensive Activity Rate Treating patients Treatments 6,900 8,000 $4.00 Providing hygienic care Hygienic hours 4,800 17,600 5.00 Responding to requests Requests 32,000 80,000 2.00 Monitoring patients Monitoring hours 6,000 72,000 3.00 Required: 1. Determine the total nursing costs assigned to each patient category. Costs Assigned Normal $ Intensive $ 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. Normal $ per patient day Intensive $ per patient day 3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient…
Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $271 per day Radiology $382 per image Pharmacy $37 per physician order Chemistry lab $103 per test Operating room $680 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 2 days 10 days Number of images 2 images 8 images Number of physician orders 4 orders 6 orders Number of tests 5 tests 8 tests Number of operating room hours 2 hours 6.5 hours a. Determine the activity cost associated with each patient. Abel Putin $fill in the blank 1 Cheryl Umit $fill in the blank 2
Can you help with part 4 of this quesstion? Parts 1, 2, and 3 have been answered. Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its “products.” The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: ActivityBudgeted Activity CostActivity BaseScheduling and admitting$432,000 Number of patientsHousekeeping4,212,000 Number of patient daysNursing5,376,000 Weighted care unitTotal costs$10,020,000 Total “patient days” are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a…
Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $176 per day Radiology $248 per image Pharmacy $38 per physician order Chemistry lab $96 per test Operating room $760 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 5 days 11 days Number of images 4 images 5 images Number of physician orders 7 orders 9 orders Number of tests 2 tests 5 tests Number of operating room hours 3 hours 6.5 hours a. Determine the activity cost associated with each patient. Abel Putin $fill in the blank 1 Cheryl Umit $fill in the blank 2 b. Why is the total activity cost different for the two patients? apparently had a…
A Community Hospital has two (2) service departments: Maintenance and Food Services. The hospital has three (3) patient care units, namely: General Medicine, OB, and Surgery. Additional information are as follows: Amount of cost to be allocated: Maintenance P 8,000,000 Food Services P 3,000,000 Allocation method: Maintenance Costs are allocated based on square foot assigned to the Food Service Costs are allocated based on number of meals served to the EXPECTED UTILIZATION RATES SQ. FT. Meals Served Food Services 10,000 30,000 Maintenance 10,000 10,000 Surgery 20,000 40,000 OB 30,000 30,000 General Medicine 30,000 90,000 TOTAL 100,000 200,000 Using the information, allocate the costs of the two (2) service departments with the three (3) patient care units using: Direct Method, Step Method – Maintenance First, Step Method – Food Services First, and Reciprocal Method.
Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected volumes and samples direct costs. Projected total costs for the Outpatient Surgery department are $20 million ($12 million in direct costs and $8 million in indirect costs). Use the steps provided in your textbook to Calculate the cost per procedure using job-order costing. Procedure Projected Volumes Labor Expense Supply Expense Subcutaneous Tissue Debridement 2,000 $100 $90 Esophagastroduodeno with Biopsy 4,000 $150 $60 Aspiration/Injection of a Joint 8,000 $75 $30 Colonoscopy 10,400 $110 $20 Next, Outpatient Surgery wants to add a cost driver to better represent the causal relationship of their indirect costs to produce a more accurate cost-per-procedure. Using the steps in your textbook assign costs to each procedure using the following information. Procedure Equipment Use (min.) Subcutaneous Tissue Debridement 10 Esophagastroduodeno with…
Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected volumes and samples direct costs. Projected total costs for the Outpatient Surgery department are $20 million ($12 million in direct costs and $8 million in indirect costs). Use the steps provided in your textbook to Calculate the cost per procedure using job-order costing. Procedure Projected Volumes Labor Expense Supply Expense Subcutaneous Tissue Debridement 2,000 $100 $90 Esophagastroduodeno with Biopsy 4,000 $150 $60 Aspiration/Injection of a Joint 8,000 $75 $30 Colonoscopy 10,400 $110 $20 Stage 1: Calculate the RVU for each procedure (Show your work): Stage 2: Calculate the total cost for each procedure (Show your work): Next, Outpatient Surgery wants to add a cost driver to better represent the causal relationship of their indirect costs to produce a more accurate cost-per-procedure. Using the steps in your textbook assign costs to each procedure…
eBook Question Content Area Activity-based costing for a service company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $219 per day Radiology $309 per image Pharmacy $50 per physician order Chemistry lab $91 per test Operating room $680 per