Question No. 2 (20 Marks)

Procedure	Laparoscopic surgery OMR
Surgical time and materials	500
Anaesthesia time and materials	400

Muscat private hospital is one of the old private hospitals in Oman. They are carrying out surgery procedures on patients, is Laparoscopic surgery. The surgery procedure incurs the following information:

The total overheads for the last year and some additional data, are shown below:

Cost	Cost Driver	OMR
Administrative costs	Administrative time per procedure	300000
Nursing costs	Length of patient stay	300000
Catering costs	Number of meals	200000
General facility costs	Length of patient stay	150000
Total overhead costs		950000

Procedure	Laparoscopic surgery
No. of Procedures	5000
Administrative time per procedure (hours)	3
Length of patient stay per procedure (hours)	12
Average no. of meals required per patient	2

Required:

1. Calculate Cost per drive if the organization uses Activity Based Costing (ABC) System. . (4 mark)
2. Calculate Total Cost Procedure if the organization uses Activity Based Costing (ABC) System. (10 Mark)
3. Most of the costing systems have some drawbacks, so does ABC, comment. (6 Mark)