Exercise C-5 Activity-based costing LO P2

Health Co-op is an outpatient surgical clinic that 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 clinics three cost centers and their cost drivers follow.

Cost Center	Cost				Cost Driver			Driver Quantity
Professional salaries .		$	1,600,000			Professional hours			10,000
Patient services and supplies			27,000			Number of patients			600
Building cost			150,000			Square feet			1,500

The two main surgical units and their related data follow.

Service	Hours			Square Feet*			Patients
General surgery		2,500			600			400
Orthopedic surgery		7,500			900			200

*Orthopedic surgery requires more space for patients, supplies, and equipment.

(Round activity rate answers to 2 decimal places, and all other answers to nearest whole number.)

Link to table(s) to write answer: https://gyazo.com/0b98b6c04bec24774cfac397ccadfcb9

OR

Written Questions:

1. Assume costs are allocated based on number of patients. Compute the average cost per patient.

2. Compute the cost per cost driver for each of the three cost centers

3. Use the results from part 2 to allovate costs from each of the three cost centers to the general surgery unit. Compute total cost and average cost per patient for the general surgery unit.