Sehat Selalu Hospital (SSH) as a hospital that serving the community must provide services that serving the needs of the publicin terms of quality and price. The SSH offers a wide range of services, namely: Inpatient Services, Emergency Room, Specialist Polyclinic, Medical Check Up, Central Surgery, Maternity Rooms, etc.

SSH providing inpatient services for patients who require intensive care to make it easier to observe the patient's health development on an ongoing basis. Inpatient services at the SSH are one of the largest sources of income from other health services offered by the hospital, but in determining the price of inpatient services at the SSH still use traditional methods, whereas in determining the price it is essentials for the hospital to know the amount each cost used. This can cause the imposition of specified inpatient services charges to be cheaper (undercosting) or more expensive (overcosting) of the costs that should be consumed in the inpatient services.

The tariff that is too high will harm the hospital service users, especially the weak economic community because of the inability to pay the amount of the hospital bill, eventually it also harms the hospital by increasing the number of receivables. A tariff that is too low will harm the hospital because of the hospital's inability to cover the costs incurred in producing a unit or service package. The tariff for inpatient unit at SSH are explained in Table 1.

Class room type Tariff per day (IDR) Days of hospitalization per year (day) Sales (in IDR 000)

VIP 1,600,000 977 1,563,200

Class I 800,000 3,553 2,842,400

Class II 500,000 5,857 2,928,500

Class III 300,000 9,789 2,936,700

Calculation of the cost of inpatient service is very important because it relates to the problem of determining the unit cost of inpatient service, which will ultimately affect the determination of the selling price or inpatientprice, thereby producing a surplus or deficit in percent of the same magnitude for each bed of each class so that management of the hospital does not know the actual profit or loss, whereas to know the actual profit or loss,SSH need to determine the inpatient price accurately. Thus, they should calculate unit cost accurately.

In order to help management of SSH to provide accurate unit cost which eventually affect the pricing, the calculation of unit cost using other methods is used so it can be a consideration for making decisions in the future. Other method used to calculate unit cost is the Activity Based Costing (ABC) method. Management also wants to know the minimum tariff per day using ABC method because ABC claimed if this method in practice is more profitable than traditional cost systems, representing a more rigorous application by tracking other costs that can actually be tracked, not only for expenditure units but for activities desired to produce output. The hospital has many activities which are the basis for using the calculation of cost services using Activity Based Costing method(Table 2 and 3). Thebusiness department involved consists of the service department, general department and administrative department, there is no production department. SSH determines 4 activity cost pools, namely customer orders, product services, order size and organization facilities (Table 4). The characteristic of class room type as cost object at SSH shown in Table 5. Distribution of annual variabel cost to cost object shown in Table 6. You as a management consultant are asked to determine the cost, product margin and tariff for each class using the ABC method.

Amount of Annual Overhead Costs at SSH (in 000)

Activity Amount of Cost (IDR)

Building utilities 192,000

Room cleaning service 97,700

Patient care 2,640,000

Laundry 8,300

Building maintenance 37,200

Patient facility service 1,213,800

Employe wages and salaries 3,500,200

Amount of Annual Variable Costs at SSH (in 000)

Activity Amount of Cost (IDR)

Disposable medical supplies 1,147,300

Daily food service 665,900

Activity Cost Pools and Activity Measure at SSH

Activity Cost Pool Activity Measure

Customer orders Number of the inpatient rooms

Product services Length of days of inpatient

Order Size Number of inpatients

Organization facilities Length ofdays of assets used

The Characteristic of Class Room Typeat SSH

Supporting Data VIP Class I Class II Class III Total

Number of inpatient rooms 5 4 5 3 17

Number of inpatients (person) 376 1,416 2,160 2,500 6,452

Length of days of inpatient care (days) 677 2,553 3,857 3,821 10,908

Length of days of assets used (days) 350 250 280 350 1,230

Distribution of Annual Variabel Cost to Cost Object

Activity VIP Class I Class II Class III Total

Disposable medical supplies 515,000 345,000 232,500 54,800 1,147,300

Daily food service 310,000 185,400 110,000 60,500 665,900

Instruction

1. Assign overhead costs to activity cost pools by business department. Distribution of resource consumption across activity cost pools determined by yourself based on logical considerations.

2. Calculate activity rates.

3. Assign overhead costs to cost objects using the activity rates and activity measures.

4. Prepare management reports.

5. What is the minimum tariff that must be set for each type of classroom based on the abc method ?

6. Which types of classrooms are the most profitable and less profitable ? Why did this happen ? Explain.

7. What is your recommendation related to less profitable segments to be more profitable?