Mayo Clinic is implementing Activity-Based Costing (ABC) for its healthcare services:

Requirements:

• Calculate the cost per patient using ABC:
  • Direct Costs: $500 per patient
  • Indirect Costs: $300 per patient

• Apply Marginal Cost Accounting to analyze the cost of treating additional patients.
• Evaluate the effectiveness of ABC in allocating costs across different medical specialties.
• Discuss how Standard Cost Accounting could improve budgeting and variance analysis.
• Recommend strategies to reduce costs based on insights from ABC and Marginal Cost Accounting.

Cost Calculation (ABC):

Category	Amount per Patient ($)
Direct Costs	$500
Indirect Costs	$300
Total Cost per Patient	$800