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Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital

Activity-Based Costing for a Service Company

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 $279 per day
Radiology $393 per image
Pharmacy $41 per physician order
Chemistry lab $96 per test
Operating room $800 per operating room hour

The activity usage information associated with the two patients is as follows:

Abel Putin Cheryl Umit
Number of days 2 days 10 days
Number of images 2 images 7 images
Number of physician orders 4 orders 6 orders
Number of tests 5 tests 8 tests
Number of operating room hours 4.5 hours 6 hours

a. Determine the activity cost associated with each patient.

Abel Putin $fill in the blank 1
Cheryl Umit $fill in the blank 2

b. Why is the total activity cost different for the two patients?

apparently had a different condition that required more extensive treatment. Thus, the activity cost to is more than the activity cost of the other patient.

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