Valley 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 fro the hospital indirect costs:
Activity Activity Rate___________
Room and meals ..........$200 per day
Radiology ............$300 pre image
Pharmacy .............$ 40 per physician order
Chemistry lab ..........$ 75 per test
Operating room ..........$900 per operating room hour
The activity usage 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 twopatients?

Transcribed Image Text:

Patient Blair Patient Thatcher Number of days Number of images Number of physician orders Number oftests Number ofoperating room hours 4 days 2 images 4 orders 3 tests 2 hours 7 days 4 images Sorders 6 tests 6 hours