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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 has identified the following activities and activity rates for the hospital indirect costs:

Activity	Activity Rate
Room and meals	$239 per day
Radiology	$337 per image
Pharmacy	$63 per physician order
Chemistry lab	$110 per test
Operating room	$700 per operating room hour

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

Line Item Description	Abel Putin	Cheryl Umit
Number of days	3 days	9 days
Number of images	2 images	7 images
Number of physician orders	7 orders	9 orders
Number of tests	3 tests	6 tests
Number of operating room hours	2.5 hours	7 hours

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Determine the activity cost associated with each patient. Abel Putin fill in the blank 1 of 2$ Cheryl Umit fill in the blank 2 of 2$

b. Why is the total activity cost different for the two patients? fill in the blank 1 of 2

Abel PutinCheryl Umit

apparently had a different condition that required more extensive treatment. Thus, the activity cost to fill in the blank 2 of 2

Abel PutinCheryl Umit

is more than the activity cost of the other patient.