ABC system in the medical industry. Adamac Clinic is a specialist healthcare provider which operates in Lagos, Nigeria. Output is defined as patient days. The clinic uses ABC in its accounting system and provides the following three services to patients. Note all costs are presented using the currency of Nigeria i.e., Nigerian Naira (₦):

a. Daily care which include medical treatment and admission

b. Accommodation and feeding

c. After medical care

During the last financial year, the following details were captured in the books of the clinic:

Activity	Annual Cost (₦)	Cost Driver	Days/Hours
Daily care	2,100,000	Nursing days	10,000
Accommodation and feeding	4,500,000	Patient days	45,000
After medical care	1,500,000	Consultation hours	82,000

The clinic had four main specialist areas which were recorded as follows:

Medical Problem	Nursing Days	Patient Days	Consultation Hours
Malaria	5000	30000	20000
Typhoid fever	3000	12000	15000
Tuberculosis	1500	1800	20000
Diarrhea	500	1200	27000
Total	10000	45000	82000

1. Compute the rate for each activity pool of the clinic.

2. Compute the daily rate for each of the medical problems.

3. During the first quarter of last year, the clinic recorded the following number of patients:

Medical Problem Number of Patient Days

Malaria 1,000

Typhoid fever 300

Tuberculosis 700

Diarrhea 500

Total 2,500

Compute the cost of providing medical care to patients using ABC method.

4. Comment in the application of ABC in the medical industry

Answer rating: 100% (QA)

1 Rate for each activity pool in the clinic Activity Annual Cost Cost Driver DaysHours Rate Calculat... View the full answer