Product costing and decision analysis for a service company Pleasant Slay 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: Activity Budgeted Activity Cost Activity Base Scheduling and admitting 432,000 Number of patients Housekeeping 4,212,000 Number of patient days Nursing 5,376,000 Weighted care unit Total 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 four-day stay in the hospital.) During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows: Activity-Base Usage Procedure A Number of patients 280 Average length of stay 6 days Patient days 1,680 Weighted care units 1,200 Procedure B Number of patients 650 Average length of stay 5 days Patient days 3,250 Weighted care units 6,000 Procedure C Number of patients 1,200 Average length of stay 4 days Patient days 4,800 Weighted care units 24,000 Private insurance reimburses the hospital for these activities at a fixed daily rate of 406 per patient day for all three procedures. Instructions 1. Determine the activity rates. 2. Determine the activity cost for each procedure. 3. Determine the excess or deficiency of reimbursements to activity cost. 4. Interpret your results.

Communication Bon Jager Inc. manufactures and sells medical devices used in cardiovascular surgery. The sales team consists of two salespeople, Dean and Martin, A contribution margin report by salesperson was prepared as follows: Bon Jager Inc. Contribution Margin by Salesperson Dean Martin Sales 400,000 480,000 Variable cost of goods sold 184,000 264,000 Manufacturing margin 216,000 216,000 Variable selling expenses: Variable promotion expenses 72,000 43,200 Variable sales commission expenses 56,000 67,200 Total variable selling expenses 128,000 110,400 Contribution margin 88,000 105,600 Manufacturing margin as a percent of sales (manufacturing margin ratio) 54% 4S% Contribution margin ratio 22% 22% Write a brief memo to Anna Berenson, the Vice President of Marketing, evaluating the performance of the company's salespeople and providing recommendations on how the salespeople could improve profitability.

Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4) Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years.  Number of Visitors per Year(thousands) Maintenance Costs($000)   1,850   $ 3,025     2,030     3,322     2,500     4,000     Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?