Managerial Accounting
14th Edition
ISBN: 9781337270595
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 12, Problem 4PA
a)
To determine
Lean Manufacturing: Lean manufacturing aims at reducing the cost and minimizing the waste involved in the production, in order to optimize the value for the product or the service.
To Prepare: A Pareto Chart for the given ER activities.
b)
To determine
To Identify: The cost of quality classification for ER activities.
c)
To determine
To Prepare: The cost of quality report for Company H for ER activities.
d)
To determine
To Prepare: The Value Added/ Non-Value Added Analysis for Company H for ER activities.
e)
To determine
To Interpret: The Cost of Quality Report and Value Added/ Non-Value Added Analysis for ER activities of Company H.
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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
Which of the following activity bases would be the most appropriate for food costs of a hospital?
a.quantity of prescriptions filled
b.how many MRI's are taken
c.number of nurses scheduled to work
d.number of patients who stay in the hospital
Chapter 12 Solutions
Managerial Accounting
Ch. 12 - What is the benefit of the lean philosophy?Ch. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Why would a lean manufacturer strive to produce...Ch. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 13DQCh. 12 - Prob. 1BECh. 12 - Prob. 2BECh. 12 - Prob. 3BECh. 12 - Prob. 4BECh. 12 - Prob. 5BECh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Calculate lead time Williams Optical Inc. is...Ch. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Lean accounting Modern Lighting Inc. manufactures...Ch. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - Prob. 18ECh. 12 - Process activity analysis The Brite Beverage...Ch. 12 - Prob. 20ECh. 12 - Prob. 21ECh. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Lean accounting Dashboard Inc. manufactures and...Ch. 12 - Prob. 4PACh. 12 - Prob. 1PBCh. 12 - Lead time Master Chef Appliance Company...Ch. 12 - Lean accounting Com-Tel Inc. manufactures and...Ch. 12 - Pareto chart and cost of quality report for a...Ch. 12 - Prob. 1ADMCh. 12 - Prob. 2ADMCh. 12 - Prob. 3ADMCh. 12 - Ethics in Action In August, Lannister Company...Ch. 12 - Prob. 3TIF
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- Formation of an Activity Dictionary A hospital is in the process of implementing an ABC system. A pilot study is being done to assess the effects of the costing changes on specific products. Of particular interest is the cost of caring for patients who receive in-patient recovery treatment for illness, surgery (noncardiac), and injury. These patients are housed on the third and fourth floors of the hospital. The floors are dedicated to patient care and have only nursing stations and patient rooms. A partial transcript of an interview with the hospitals nursing supervisor is as follows: 1. How many nurses are in the hospital? There are 101 nurses, including me. 2. Of these 100 nurses, how many are assigned to the third and fourth floors? Fifty nurses are assigned to these two floors. 3. What do these nurses do (please describe)? Provide nursing care for patients, which, as you know, means answering questions, changing bandages, administering medicine, changing clothes, etc. 4. And what do you do? I supervise and coordinate all the nursing activity in the hospital. This includes surgery, maternity, the emergency room, and the two floors you mentioned. 5. What other lodging and care activities are done for the third and fourth floors by persons other than the nurses? The patients must be fed. The hospital cafeteria delivers meals. The laundry department picks up dirty clothing and bedding once each shift. The floors also have a physical therapist assigned to provide care on a physician-directed basis. 6. Do patients use any equipment? Yes. Mostly monitoring equipment. 7. Who or what uses the activity output? Patients. But there are different kinds of patients. On these two floors, we classify patients into three categories according to severity: intensive care, intermediate care, and normal care. The more severe the illness, the more activity is used. Nurses spend much more time with intermediate care patients than with normal care. The more severe patients tend to use more of the laundry service as well. Their clothing and bedding need to be changed more frequently. On the other hand, severe patients use less food. They eat fewer meals. Typically, we measure each patient type by the number of days of hospital stay. And you have to realize that the same patient contributes to each type of product. Required: Prepare an activity dictionary with three categories: activity name, activity description, and activity driver.arrow_forwardProjected Revenues by Patient Services Department Routine Care Laboratory Radiology Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments. Total revenues Projected Costs for All Departments Patient Services Departments (Direct Costs): Routine Care Laboratory Radiology Total costs Support Services Departments (Overhead Costs): Financial Services Facilities Housekeeping General Administration Human Resources Total overhead costs Total costs of both patient and support services Projected profit EXHIBIT 6.7 Kensington Hospital: Final Allocations Support Department (allocation rate) Financial Services ($0.05556) Facilities Housekeeping…arrow_forwardOwl-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…arrow_forward
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