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We Care is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 60%. 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 clinics three cost centers and their cost drivers follow.

Cost Center	Cost			Cost Driver	Driver Quantity
Professional salaries	$	1,400,000		Professional hours		9,000
Patient services and supplies		26,000		Number of patients		600
Building cost		149,000		Square feet		1,400

The two main surgical units and their related data follow.

Service	Hours	Square Feet*		Patients
General surgery	2,400	400		400
Orthopedic surgery	6,600	1,000		200

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

Cost Center	Cost per Driver
Professional salaries	$	per hour
Patient services & supplies	$	per patient
Building cost	$	per sq. ft

Worksheet

Difficulty: Hard

Learning Objective: 21-P2 Assign overhead costs using activitybased costing.

2.

Use the results from part 1 to allocate costs from each of the three cost centers 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 intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

	Total	Average cost per patient
General surgery	$	$
Orthopedic surgery	$	$