42. LO.3-LO.5 (Cost drivers; ABC; analysis) Boerne Community Hospital has been under increasing pressure to be accountable for its patient charges. The hospital's c direct costs for surgery, medication, and other treatments are explicitly considered. The a tighter relationship between costs and pricing. This approach would make prices for hospital's controller has suggested that the hospital improve pricing policies by seeking services less arbitrary. As a first step, the controller has determined that most costs can be assigned to one of three cost pools. The three cost pools follow along with the esti mated amounts and activity drivers. Amount Activity Driver Professional hours Quantity 75,000 hours 6,187,500 Square feet used 850,000 Patients served Professional salaries $13,125,000 Activity Center Building costs Risk management 56,250 sq. ft. 2,500 patients The hospital provides service in three broad categories. The services follow with their volume measures for the activity centers. Service Surgery Housing patients Outpatient care Professional Hours Square Feet Number of Patients 3,750 12,500 500 70,000 27,500 1,250 1,250 16,250 750 a. What bases might be used as cost drivers to allocate the service center costs among the patients served by the hospital? Defend your selections. b. The hospital currently charges an "add-on" rate calculated using professional hours to patients' direct charges. What rate is Boerne Community Hospital charging per hour? (Round to the nearest dollar.) c. Determine the allocation rates for each activity center cost pool. d. Allocate the activity center costs to the three services provided by the hospital. e. Boerne Community Hospital has decided to estimate costs by activity center using professional hours. What is the cost per professional hour of each service? What would cause the cost per hour difference for the three services? (Round to the near- est dollar.)