Beruntung Hill (BH) is a private hospital carrying out two types of procedures on patients. Each type of procedure incurs the following direct costs:

Procedure	A (RM)	B (RM)
Surgical time and materials	1,200	2,640
Anaesthesia time and materials	800	1,620

BH currently calculates the overhead cost per procedure by taking the total overhead cost and simply dividing it by the number of procedures, then rounding the cost to the nearest 2 decimal places. Using this method, the total cost is RM2,475.85 for Procedure A and RM4,735.85 for Procedure B. Recently, another local hospital has implemented activity-based costing (ABC). This has led the finance director at BH to consider whether this alternative costing technique would bring any benefits to BH. He has obtained an analysis of BHs total overheads for the last year and some additional data, all of which is shown below:

Cost	Cost driver		RM
Administrative costs	Administrative time per procedure	1,870,160
Nursing costs	Length of patient stay	6,215,616
Catering costs	Number of meals	966,976
General facility costs	Length of patient stay		8,553,600
Total overhead costs		17,606,352

Procedure	A	B
No, of procedures	14,600	22,400
Administrative time per procedure (hours)	1	1.5
Length of patient stay per procedure (hours)	24	48
Average no. of meals required per patient	1	4

Required:

a) Calculate the full cost per procedure using activity-based costing.

(6 marks)

2. Making reference to your findings in (a), advise the finance director as to whether activity-based costing should be implemented at BH.

(8 marks)

c) What do ABC and ABM have in common, and how do they differ?

(6 marks)