Exercise 17-18 Activity-based costing

Exercise 17-18 Activity-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 30%. 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 Cast Pool Professional salaries Patient services and supplies Building cost Cost Cost Driver $943,000 Professional hours 15,120 Number of patients 72,600 square feet Driver Quantity 8,200 420 1,326 The two main surgical units and their related data follow, Service Hours Square Feet Patients General surgery 1,600 510 310 Orthopedic surgery 610 110 *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. (Round your final answers to whole dollar) Overhead Cost Activity Drivers Activity Rate Activity drive Inclined Overhed etty Professional salaries Patient services and supplies Building cost Professional hours Number of patients Square foot Orthopedic Surgery Activity driver incurred Overhead assigned