Cathal's Private Hospital (CPH) is a well-known and highly reputable provider of a range of orthopaedic...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Cathal's Private Hospital (CPH) is a well-known and highly reputable provider of a range of orthopaedic surgeries to Irish patients. The hospital has been in operation for ten years and during that time has streamlined all of its services and most of its administrative functions. The hospital accountant is keen to ensure best practice in the finance function, particularly in costing the various surgeries that are conducted and is considering the introduction of activity based costing (ABC). CPH currently applies a traditional approach to costing surgeries by attributing direct costs as far as possible and allocating hospital overheads based on the patient's average length of stay (ALOS) in the hospital. Total hospital overheads for the year are budgeted at €4,801,226 and the total budgeted ALOS for all patients for the year is 23,375 days. To facilitate the introduction of ABC the hospital accountant has analysed all of the overheads incurred into six categories of expense and has also established the cause or driver of the expense as shown in the table below: Expense category X-ray department costs Hospital Consultant costs Hospital Consultant Operating theatre costs operating theatre Physiotherapy of physiotherapy sessions Occupational therapy costs therapy sessions Sundry hospital costs the hospital (ALOS) Cause (driver) of expense Number of X-rays provided Number of meetings with X-ray department costs Hospital Consultant costs Operating theatre costs Physiotherapy costs Occupational therapy costs Sundry hospital costs Number of hours spent in costs Number Number of occupational Average length of stay in Budgeted data relating to the expense categories has also been compiled by the hospital accountant and is as follows: Total X-rays provided Total physiotherapy sessions Total occupational therapy sessions €1,008,320 € 960,267 €1,104,430 € 624,143 € 528,106 € 575,960 6,302 15,223 15,003 Total occupational therapy sessions Total hours in operating theatre Total meetings with Hospital Consultants Direct materials cost ALOS €960 Information relating to two surgeries conducted during the year is given below: 4.2 days Number of X-rays Meetings with Hospital Consultant 4 meetings Physiotherapy Occupational therapy Theatre time Knee surgery 5 sessions 15,003 9,154 8,314 Hip surgery €425 3.5 days 2 2 meetings 4 sessions 3 sessions 5 sessions 2 hours You are required to: (a) Calculate the total cost of each of the two surgeries noted above using: 1.25 hours The costing approach currently used by Cathal's Private Hospital. (5 Marks) (i) Activity based costing. (15 Marks) (b) Comment in detail on your answers in (a) (i) and (ii) above. (10 marks) Total (30 Marks) Cathal's Private Hospital (CPH) is a well-known and highly reputable provider of a range of orthopaedic surgeries to Irish patients. The hospital has been in operation for ten years and during that time has streamlined all of its services and most of its administrative functions. The hospital accountant is keen to ensure best practice in the finance function, particularly in costing the various surgeries that are conducted and is considering the introduction of activity based costing (ABC). CPH currently applies a traditional approach to costing surgeries by attributing direct costs as far as possible and allocating hospital overheads based on the patient's average length of stay (ALOS) in the hospital. Total hospital overheads for the year are budgeted at €4,801,226 and the total budgeted ALOS for all patients for the year is 23,375 days. To facilitate the introduction of ABC the hospital accountant has analysed all of the overheads incurred into six categories of expense and has also established the cause or driver of the expense as shown in the table below: Expense category X-ray department costs Hospital Consultant costs Hospital Consultant Operating theatre costs operating theatre Physiotherapy of physiotherapy sessions Occupational therapy costs therapy sessions Sundry hospital costs the hospital (ALOS) Cause (driver) of expense Number of X-rays provided Number of meetings with X-ray department costs Hospital Consultant costs Operating theatre costs Physiotherapy costs Occupational therapy costs Sundry hospital costs Number of hours spent in costs Number Number of occupational Average length of stay in Budgeted data relating to the expense categories has also been compiled by the hospital accountant and is as follows: Total X-rays provided Total physiotherapy sessions Total occupational therapy sessions €1,008,320 € 960,267 €1,104,430 € 624,143 € 528,106 € 575,960 6,302 15,223 15,003 Total occupational therapy sessions Total hours in operating theatre Total meetings with Hospital Consultants Direct materials cost ALOS €960 Information relating to two surgeries conducted during the year is given below: 4.2 days Number of X-rays Meetings with Hospital Consultant 4 meetings Physiotherapy Occupational therapy Theatre time Knee surgery 5 sessions 15,003 9,154 8,314 Hip surgery €425 3.5 days 2 2 meetings 4 sessions 3 sessions 5 sessions 2 hours You are required to: (a) Calculate the total cost of each of the two surgeries noted above using: 1.25 hours The costing approach currently used by Cathal's Private Hospital. (5 Marks) (i) Activity based costing. (15 Marks) (b) Comment in detail on your answers in (a) (i) and (ii) above. (10 marks) Total (30 Marks)
Expert Answer:
Answer rating: 100% (QA)
a Calculate the total cost of each of the two surgeries noted above using i The costing approach currently used by Cathals Private Hospital 5 Marks Total cost using costing approach currently used by ... View the full answer
Posted Date:
Students also viewed these accounting questions
-
A project has been in operation for 5 years, yielding the following annual cash flows Year Cash Flow 0.................-$103,000 1....................102,700 2....................-87,000...
-
The Datametrix Corporation has been in operation for one full year (2010). Financial statements are shown below. Sales are expected to grow at a 30 percent annual rate for each of the next three...
-
The Biometrix Corporation has been in operation for one full year (2010). Financial statements follow. Biometrixs management is interested in determining the value of the venture as of the end of...
-
Apply KCL at the supernode (circled in green), i.e., write i=0 at the supernode (you don't need to solve the equation, but must label the node voltages) 2023 20 V 10 A V2 302 www + Vy - 692 www VI 4 ...
-
Constantin Corporation is preparing its December 31, 2014, balance sheet. The following items may be reported as either a current or long-term liability. 1. At December 31, bonds payable of...
-
Describe some potential pitfalls in relying solely on the results of a factor- weighting analysis for supplier selection.
-
Assumptions and Principles} Four common accounting practices are listed below. a. A customer pays \(\$ 20\) to mail a package on December 30. The delivery company recognizes revenue when the package...
-
Prepare the journal entries to record the following transactions on Novy Companys books using a perpetual inventory system. (a) On March 2, Novy Company sold $900,000 of merchandise to Opps Company,...
-
6. (14 Points) Use midpoints and four approximationg rectangles to estimate the area of the region enclosed by the curves f(z) = e" - 2, y = 0,z = 0 and z = 2. f ( x ) = c' - 2, 4 = 0 X : 0 4: 2
-
Company A is a global company based in the United States that operates in the financial industry. Company A serves its customers with financial products, such as checking accounts, bank cards, and...
-
A 375-mm-long sheet with a cross-sectional area of 4 x 10-4 m (See Fig 7.30) is stretched with a force, F, until or = 20. The material has a true stress-true strain curve o = (650 MPa)e 0.3. 250 mm...
-
On June 1 of the current year, Pamela Schatz established a business to manage rental property. She completed the following transactions during June: Opened a business bank account with a deposit of $...
-
Some support departments typically found in manufacturing and nonmanufacturing organizations are as follows: Cafeteria Personnel Maintenance Purchasing Accounting Required : For each of the preceding...
-
Sierra Stone Ltd. received an invoice dated January 16 with terms 2/15, n/30. The amount stated on the invoice was $2702.00. (a) What is the last day for taking the cash discount? (b) What is the...
-
A reasonable accommodation of an employee's religion is one that eliminates the confli between employment requirements and religious practices. Ms. Wilson began wearing a button with a photo of an...
-
Tess the (Tenant) entered a written lease of a home from Larry (Landlord) on January 1, 2022. The lease provided that Tess would pay $36,000 per year rent, payable in $3,00 per monthly installments,...
-
Find a recent case (within the past 10 years) in which a business is a party to the lawsuit and a right or responsibility from the Constitution is an issue. Give a brief summary of the case and the so
-
State whether each of the following will increase or decrease the power of a one-way between-subjects ANOVA. (a) The effect size increases. (b) Mean square error decreases. (c) Mean square between...
-
Inferring Values by Using the Statement of Earnings and Statement of Financial Position Equations LO1-1 Review the chapter explanations of the statement of earnings and the statement of financial...
-
Jerrys Taxis Ltd operates a taxi service in a large provincial city. All of the taxis are owned by the business and all the drivers are employees rather than owner drivers. The managers wish to...
-
Preparing a Statement of Earnings and a Statement of Financial Position LO1-1 Ducharme Corporation was organized by five individuals on January 1, 2020. At the end of January 2020, the following...
Study smarter with the SolutionInn App