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10 Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities
10 Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:
Activity | Activity Rate |
Room and meals | $247 per day |
Radiology | $195 per image |
Pharmacy | $49 per physician order |
Chemistry lab | $86 per test |
Operating room | $1,020 per operating room hour |
The activity usage information associated with the two patients is as follows:
Abel Putin | Cheryl Umit | |
Number of days | 5 days | 3 days |
Number of images | 3 images | 2 images |
Number of physician orders | 7 orders | 2 orders |
Number of tests | 5 tests | 4 tests |
Number of operating room hours | 8 hours | 4 hours |
Required: | |
a. | Determine the activity cost associated with each patient. If required, round all per unit amounts to the nearest cent. |
b. | Why is the total activity cost different for the two patients? |
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