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Q3) Bexar Community Hospital has been under increasing pressure to be accountable for its patient charges. The hospital currently uses the traditional allocation method and
Q3) Bexar Community Hospital has been under increasing pressure to be accountable for its patient charges. The hospital currently uses the traditional allocation method and allocates its total costs to its three Departments: Surgery, Outpatient, and Post-Surgical Care based on square feet in each of the Departments. The hospital's CFO has suggested that the hospital improve pricing policies by seeking a tighter relationship between costs and pricing. She has suggested using ac- tivity based costing method and has determined that costs can be assigned to one of three cost pools. The three cost pools follow along with the estimated amounts and activity drivers. Activity Driver Professional Hours Patients Served Square Feet Used Quantity 25,554 8.255 35.210 Activity Center Costs Professional Salaries $950,900 Medical Supplies $99,200 Building costs $77,085 Details for each Department follow: Department Square Feet Surgery 11,250 Outpatient 12.850 Post-Surgical Care 11.110 Professional Hours Number of Patients 8,460 1,100 4,474 3,130 12,620 4,025 ) What is the cost allocation to each Department under the traditional method? 3B) What is the cost allocation to each Department under the ABC method
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