Question
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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