BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
359 views

Activity-Based Product Costing

Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients:

Chapter 5, Problem 40E, Activity-Based Product Costing Suppose that a surgical ward has gathered the following information

Required:

  1. 1. Determine the total nursing costs assigned to each patient category.
  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 to two decimal places.)
  3. 3. CONCEPTUAL CONNECTION The supervisor of the surgical ward has suggested that patient days is the only driver needed to assign nursing costs to each type of patient. Calculate the charge per patient day (rounded to the nearest cent) using this approach and then explain to the supervisor why this would be a bad decision.

1.

To determine

Calculate the total nursing costs which are assigned to each patient category, normal and intensive.

Explanation

Activity Based Costing (ABC):

Activity based costing is an apportionment of costs that first considers the activity drivers that helps in the allocation of costs to various activities and then allocates costs to different cost objects by using the drivers.

Calculation of total nursing costs:

ActivityRate(R)Quantity(Q)

Normal

(R×Q)

($)

Intensive

(R×Q)

($)

(A)Treating patients4

2.

To determine

Compute the nursing costs per patient day for each type of patient.

3.

To determine

Compute charge per patient day when patient day is the only driver to assign nursing costs to each type of patient.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is a proximity card?

Accounting Information Systems

What is the goal of materials handling?

Foundations of Business (MindTap Course List)

INTEREST RATE DETERMINATION AND YIELD CURVES a. What effect would each of the following events likely have on t...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Differentiate between ROE and ROIC.

Fundamentals of Financial Management (MindTap Course List)

Temporary accounts are closed at the end of each accounting period.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)