Exercise 4-15 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 Cost Pool Professional salaries Patient services and supplies Building cost Cost Cost Driver $1,363,000 Professional hours 22,680 Number of patients 122,400 square feet Driver Quantity 9,400 540 1,440 The two main surgical units and their related data follow. Service General surgery Orthopedic surgery Hours Square Feet + Patients 2,200 570 370 7,200 870 170 * 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