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Exercise 17-15 Activity-based costing LO P3 points Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its
Exercise 17-15 Activity-based costing LO P3 points Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its relmbursements by as much as 40%. 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 Oriver Quantity 10.ee Activity cost pool. Professional salaries Patient services and supplies Building cost Cost Cost Driver $1. , Professional hours 27,000 ber of patients 150,oe Square feet 1, see The two main surgical units and their related data follow. Service General surgery Orthopedic Surgery Hours 2. See 27.5e Square Tout 50e 9ee Orthopedic surgery requires more space for patients, supplies, and equipment, Required: 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 Required: 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 Activity Overhead Cost Activity Drivers Activity Rate Overhead assigned
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