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14. Traditional and activity-based costing. Use the information in Exhibit 12.14 to answer these questions. a. What is the per unit cost of an initial,
14. Traditional and activity-based costing. Use the information in Exhibit 12.14 to answer these questions. a. What is the per unit cost of an initial, regular, and intensive visit using the conventional and ABC approaches? b. What is the total cost of initial, regular, and intensive visits using the conventional and ABC approaches? REVIEW QUESTIONS AND PROBLEMS 577 EXHIBIT 12.14 DATA FOR TRADITIONAL AND ABC COST ALLOCATION, FOR PROBLEM 14 Total Cost by Visit Type Basic Data Initial (Glven) Regular (Glven) Intensive (Given) Total +B+ (A C) Basic data and calculation of unit costs using a conventional approach 1 Number of visits 2 Direct materials (etc.) 3 Direct labor 4 Estimated overhead (total is a given) 5 Cost per visit: conventional method 8,000 $40,000 $100,000 26,000 $50.000 $120,000 8,600 $65,000 $280,000 42,600 $155.000 $500,000 $229,000 (1) Basic data: annual projections of overhead costs by activity Cost Driver Information Cost (Given) Driver (Given) Units (Given) Activity 6 Intake 7 Medical records 8 Billing 9 Other 10 Total $34,000 $35,000 $65,000 $95.000 $229,000 New visits Time spent Time spent Visits Additional basic data 3.550 new visits 2,390 hours 5,400 hours 42,600 visits (2) Basic data: actual annual operating results of cost drivers to be used to assign ABC overhead cost Visit Type O Initial (Given) Regular (Given) Intensive (Given) Total (M + N +O) 11 New visits 12 Medical records 13 Billing 14 Other 2.500 600 3.200 8.000 700 640 1,000 26,000 350 1,150 1.200 8.600 3.550 2,390 5.400 42,600
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