Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 40%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinics three activity cost pools and their cost drivers follow.

Activity Cost Pool	Cost		Cost Driver	Driver Quantity
Professional salaries	$	1,215,000	Professional hours		9,000
Patient services and supplies		20,000	Number of patients		500
Building cost		105,000	Square feet		1,400

The two main surgical units and their related data follow.

Service	Hours			Square Feet*			Patients
General surgery		2,000			550			350
Orthopedic surgery		7,000			850			150

* Orthopedic surgery requires more space for patients, supplies, and equipment. Required: 1. & 2. Compute the cost per cost driver for each of the three activity cost pools. Use the results to allocate costs to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units.

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