Beckley Hill (BH) is a private hospital carrying out two types of procedures on patients. Each type of procedure incurs the following direct costs:

BH currently calculates the overhead cost per procedure by taking the total overhead cost and simply dividing it by the number of procedures, then rounding the cost to the nearest twp decimal places. Using this method, the total cost is $2475.85 for Procedure A and $4735.85 for Procedure B.Recently, another local hospital has implemented activity-based costing (ABC). This has led the finance director at BH to consider whether this alternative costing technique would bring any benefits to BH. He has obtained an analysis of BH?s total overheads for the last year and some additional data, all of which is shown below:

Required:(a) Calculate the full cost per procedure using activity-based costing.?

(b) Making reference to your findings in part (a), advise the finance director as to whether activity-based costing should be implemented at BH.

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B ($) ($) Procedure Surgical time and materials Anaesthesia time and materials 2640 1200 800 1620 Cost Cost driver ($) Administrative costs Administrative time per 1870160 procedure Length of patient stay Nursing costs Catering costs General facility costs Total overhead costs 6215616 Number of meals 966976 Length of patient stay 8553 600 17 606 352