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Activity-Based Budgeting Assume Mountain View Hospital uses an activity-based budgeting approach for all costs except physician care. Some of the patients are treated in the
Activity-Based Budgeting Assume Mountain View Hospital uses an activity-based budgeting approach for all costs except physician care. Some of the patients are treated in the emergency room as outpatients. Others are admitted to the hospital for additional tests and treatments. Its emergency room has three activity areas with cost drivers as follows: 1. Reception-paperwork of incoming patients. Cost driver is the number of forms completed. 2. Treatment-initial diagnosis and treatment of patients. Cost driver is the number of diagnoses treated. 3. Cleaning-general cleaning plus preparing treatment facilities for next patient. Cost driver is the number of people visiting the emergency room. Budgeted Amount of Cost Driver Activiy Area Cost Driver Rates Outpatients Admitted Patients Reception $ 20 9,200 forms 8,800 forms Treatment 175 4,600 diagnoses 2,200 diagnoses Cleaning 4,500 people 3,000 people 30 a. Prepare the total budgeted cost for each activity. Activity Cost Budget Reception Treatment Cleaning Outpatients $ 0 $ 0 $ 0 Admitted Patients 0 0 0 Total $ 0 $ 0 $ 0
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