Product costing and decision analysis for a service company

Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures $($operations$)$ that are considered its "products." The

overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow:

Total "patient days" are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit $($wcu$)$ is a measure of

nursing effort used to care for patients. There were $192,000$ weighted care units estimated for the year. In addition, Pleasant Stay estimated $6,000$ patients and $27,000$

patient days for the year. $($The average patient is expected to have a a little more than a four$-$day stay in the hospital.$)$

During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows:

Activity$-$Base Usage

Procedure A