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Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital...

Activity-Based Costing for a Service Company

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 $252 per day
Radiology $355 per image
Pharmacy $56 per physician order
Chemistry lab $100 per test
Operating room $680 per operating room hour

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

Abel Putin Cheryl Umit
Number of days 5 days 10 days
Number of images 4 images 8 images
Number of physician orders 7 orders 9 orders
Number of tests 2 tests 5 tests
Number of operating room hours 4 hours 5.5 hours

a. Determine the activity cost associated with each patient.

Abel Putin $
Cheryl Umit $

b. Why is the total activity cost different for the two patients?

apparently had a different condition that required more extensive treatment. Thus, the activity cost to is more than the activity cost of the other patient.

Solutions

Expert Solution

Answer:-a)-

Crosswinds Hospital
Activity Cost of each patient
Activity Abel Putin Cheryl Umlt
$ $
Room and Meals $252 per day*5 days=1260 $252 per day*10 days=2520
Radiology $355 per image*4 images=1420 $355 per image*8 images=2840
Pharmacy $56 per physician order*7 orders=392 $56 per physician order*9 orders=504
Chemistry Lab $100 per test*2 tests =200 $100 per test*5 tests =500
Operating room $680 per hour*4 hour=2720 $680 per hour*5.5 hour=3740
Total Activity Cost 5992 10104

b)-The activity cost of Cheryl Umlt is higher than the Abel Putin, because the farmer having higher no. of activity compare to the latter.   

ekkarill92 answered 2 years ago
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