East Valley Hospital is a primary medical care facility and trauma center that serves 11 small, rural midwestern communities within a 40-mile radius. The hospital offers all the medical/

surgical services of a typical small hospital. It has a staff of 18 full-time doctors and 20 parttime visiting specialists. East Valley has a payroll of 150 employees consisting of technicians, nurses, therapists, managers, directors, administrators, dieticians, secretaries, data processors, and janitors.

Instructions With the class divided into groups, discuss and answer the following.

(a) Using your (limited, moderate, or in-depth) knowledge of a hospital’s operations, identify as many activities as you can that would serve as the basis for implementing an activity-based costing system.

(b) For each of the activities listed in (a), identify a cost driver that would serve as a valid measure of the resources consumed by the activity.

MANAGERIAL ANALYSIS