Deer Lodge Regional 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 ............................. $225 per day

Radiology ................................. $300 per image

Pharmacy ........................ $50 per physician order

Chemistry lab ................................ $125 per test

Operating room ........ $3,000 per operating room hour

The records of two representative patients were analyzed, using the activity rates. The activity information associated with the two patients is as follows:

a. Determine the activity cost associated with each patient.
b. Why is the total activity cost different for the two patients?

Transcribed Image Text:

Patient Franklin Patient Kramer Number of days Number of images Number of physician orders Number of tests Number of operating room hours 1 days 2 images 1 orders 2 tests 4 days 5 images 8 orders 5 tests 0.6 hour 2.8 hours