Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

MA Assignment 4 Simmy is a privately owned prot seeking hospital that specialises in operations to replace hip and knee joints. Simmy traditionally determines its

image text in transcribed
image text in transcribed
MA Assignment 4 Simmy is a privately owned prot seeking hospital that specialises in operations to replace hip and knee joints. Simmy traditionally determines its prices by adding a 10% mark-up to the budgeted full cost of an operation. The fixed overheads are absorbed on the basis of operating hours using a predetermined rate. Simmy Operating and Financial Data 2018 Hip Knee Total Total operating capacity (hours) 10,800 Theatre utilisation ratio 70% Average duration of operation 3-0 hours 36 hours Number of operations taken * 12?0 Total Costs 15,036,780 Fixed overheads 12,000,000 * not given The variable costs per operation are as budgeted. Simmy Budgeted Data for 2018 Hip Knee Total Fixed overhead 12,000,000 Annual operating hours 8,000 Variable cost per operation 1,450 * * not given Required: (a) Calculate the number of hip operations undertaken during the year and the variable cost of performing a knee operation. (5 marks) (b) Calculate the prices that Simmy would have charged in 2018 for: (i) A hip operation; [ii] A knee operation {5 marks} (cl An activity based costing study recently discovered that the xed overheads are determined by non operating time related activities. The study revealed the following data: Activity Cost Driver Hip Knee Fixed 0verheads Consultations with potential patients Number of consultations 3,000 2,000 8,980,000 Xrays Number of X-rays 6,200 6,200 1,800,000 Post-operative care Days of care ?,860 23,580 1,220,000 Required: Re-calculate the prices that would have been charged in 2018 for each knee and hip operation by using an activity based costing approach. (5 marks) (d) Compare the results of your calculated prices in (b) and [c] and suggest with reasons what pricing decisions you would recommend to the hospital

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac

22nd Edition

324401841, 978-0-324-6250, 0-324-62509-X, 978-0324401844

More Books

Students also viewed these Accounting questions

Question

1. Describe the Good Lives Model of offender rehabilitation

Answered: 1 week ago

Question

1. To gain knowledge about the way information is stored in memory.

Answered: 1 week ago