Ch 04 Ex 4-15 Exerclse 4-15 Actlvity-based costing LO P3 Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinic's three activity cost pools and their cost drivers follow. Activity Cost Pool Cost $2,835, 808 Professional hours Cost Driver Driver Quantity Professional salaries Patient services and supplies Building cost 35,808 Number of patients 280,808 Square feet 780 1,688 The two main surgical units and their related data follow. General surgery Orthopedic surgery Hours Square Feet Patients 3,808 8,808 658 958 458 258 Orthopedic surgery requires more space for patients, supplies, and equipment. Requlrec 1. & 2. Compute the cost per cost driver for each of the three activity cost pools. Use the results to allocate costs to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units. General Surgery Orthopedic Surgery Activity driver Overhead Activity driver Overhead Overhead Cost Activity Drivers Activity Rate Professional salaries Patient services and supplies Building cost 5 2,035,000 35,000 200,000 11,000 Professional hours S 250.00 per professional hour 8,000 S 2,000,000 700 Number of patients per patient 250 1,600 Square feet per square foot 950