Question
ABC system in the medical industry. Adamac Clinic is a specialist healthcare provider which operates in Lagos, Nigeria. Output is defined as patient days. The
ABC system in the medical industry. Adamac Clinic is a specialist healthcare provider which operates in Lagos, Nigeria. Output is defined as patient days. The clinic uses ABC in its accounting system and provides the following three services to patients. Note all costs are presented using the currency of Nigeria i.e., Nigerian Naira ():
a. Daily care which include medical treatment and admission
b. Accommodation and feeding
c. After medical care
During the last financial year, the following details were captured in the books of the clinic:
Activity | Annual Cost () | Cost Driver | Days/Hours |
Daily care | 2,100,000 | Nursing days | 10,000 |
Accommodation and feeding | 4,500,000 | Patient days | 45,000 |
After medical care | 1,500,000 | Consultation hours | 82,000 |
The clinic had four main specialist areas which were recorded as follows:
Medical Problem | Nursing Days | Patient Days | Consultation Hours |
Malaria | 5000 | 30000 | 20000 |
Typhoid fever | 3000 | 12000 | 15000 |
Tuberculosis | 1500 | 1800 | 20000 |
Diarrhea | 500 | 1200 | 27000 |
Total | 10000 | 45000 | 82000 |
1. Compute the rate for each activity pool of the clinic.
2. Compute the daily rate for each of the medical problems.
3. During the first quarter of last year, the clinic recorded the following number of patients:
Medical Problem Number of Patient Days
Malaria 1,000
Typhoid fever 300
Tuberculosis 700
Diarrhea 500
Total 2,500
Compute the cost of providing medical care to patients using ABC method.
4. Comment in the application of ABC in the medical industry
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