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Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of...

Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:

Activity

Activity Rate
Room and meals $218 per day
Radiology $196 per image
Pharmacy $52 per physician order
Chemistry lab $73 per test
Operating room $971 per operating room hour

The activity usage information associated with the two patients is as follows:

Abel Putin

Cheryl Umit
Number of days 7 days 4 days
Number of images 3 images 3 images
Number of physician orders 6 orders 1 orders
Number of tests 6 tests 3 tests
Number of operating room hours 7 hours 4 hours
Required:
a. Determine the activity cost associated with each patient. If required, round all per unit amounts to the nearest cent.
b. Why is the total activity cost different for the two patients?

Solutions

Expert Solution

Activity Cost = Activity Rate*Driver Consumed
Abel Putin Cheryl Umit
Room and meals        1,526               872
Radiology            588               588
Pharmacy            312                 52
Chemistry lab            438               219
Operating room        6,797            3,884
Total cost        9,661            5,615
b.Cost is different since driver consumption is different

ekkarill92 answered 3 years ago
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