The Intellectually Disabled Council has responsibility for distributing government grants to fund support services for intellectually disabled people. The director is concerned that grants be distributed on an equitable basis, and asks Sue Jolley, the councils management accountant, to estimate the cost of providing institutional care to clients with intellectual disabilities. Jolley decides to use activity-based costing in one of the states larger institutions, Greenfields, to obtain an initial estimate of the costs of the services provided. Working with a project team at Greenfields, she identifies the following major activities and costs for next year. The Intellectually Disabled Council has responsibility for distributing government grants to fund support services for intellectually disabled people. The director is concerned that grants be distributed on an equitable basis, and asks Sue Jolley, the councils management accountant, to estimate the cost of providing institutional care to clients with intellectual disabilities. Jolley decides to use activity-based costing in one of the states larger institutions, Greenfields, to obtain an initial estimate of the costs of the services provided. Working with a project team at Greenfields, she identifies the following major activities and costs for next year. Although the needs of the individual clients vary tremendously, the project team identifies three major service types: high-dependency support, low-dependency support and outpatient support. High-dependency and low-dependency clients live at Greenfields, while outpatients attend the centre on a daily basis. The average number of activities required to support each of the three types of clients each day is estimated as follows:

* Occupational therapy classes are attended by an average of 10 clients. The workshop is used by an average of 20 clients per day.

Required:

1. Construct an Excel spreadsheet to:

(a) calculate the cost per unit of activity driver for each of the activities identified by the project team

(b) calculate the daily cost of supporting:

(i) a high-dependency client

(ii) a low-dependency client

(iii) an outpatient.

2. Review the list of activities and suggest some major activities that may have been overlooked by the project team.

3. Do you think activity-based costing is useful in this situation? Explain your answer.

Greenfields activities consumed per client per day High-dependency Low-dependency Outpatient 3 - 0 0 2 1 0 Activity Cook meals Internal transport External transport Clean room Bath client Dress client Administer medication Provide occupational therapy Provide physiotherapy Run workshop 1 0 0 0 0 4 1 1 2 2 2 Greenfields activities performed Cost (in $'000s) 5500 200 Activity Cook meals Transport clients (internal) Transport clients (external) Clean rooms Bath clients Dress clients Administer medication Provide occupational therapy Provide physiotherapy Run workshop 450 100 144 Annual volume of activity driver 100000 meals 4000 hours of assistance 6000 hours of assistance 20000 rooms cleaned 16000 baths given 10000 clients dressed 75000 doses administered 600 classes 5000 hours of physiotherapy 200 days of operation 30 120 90 250 150