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After having shared the results of your calculations with the department management, you have been informed that the department has idle (free, unused) surgery capacity The total capacity supplied is actually 250,000 surgery minutes. This amount has been already included into the prepared estimate of the time used by doctors b) c) d) Does this piece of information have any impact on your calculations in part a)? Explain in great detail. You suggest using an ABC model (that is, model 3) as a basis for the price offer to Helse Nord RHF for the two patient groups A and B. However, hospital's Chief Financial Officer strongly disagrees with you. She claims that it is rather ridiculous to price the groups so high when there is idle capacity for more operations. As she has put it herself, "This represents a sunk cost- why should we charge a higher price for using idle surgery capacity ?" e) Estimate the costs per patient for the two patient groups providing that the information about the idle capacity is taken into account. Discuss this problem statement 3 in great detail. Identify at least four general advantages that are associated with activity -based costing. After having shared the results of your calculations with the department management, you have been informed that the department has idle (free, unused) surgery capacity The total capacity supplied is actually 250,000 surgery minutes. This amount has been already included into the prepared estimate of the time used by doctors b) c) d) Does this piece of information have any impact on your calculations in part a)? Explain in great detail. You suggest using an ABC model (that is, model 3) as a basis for the price offer to Helse Nord RHF for the two patient groups A and B. However, hospital's Chief Financial Officer strongly disagrees with you. She claims that it is rather ridiculous to price the groups so high when there is idle capacity for more operations. As she has put it herself, "This represents a sunk cost- why should we charge a higher price for using idle surgery capacity ?" e) Estimate the costs per patient for the two patient groups providing that the information about the idle capacity is taken into account. Discuss this problem statement 3 in great detail. Identify at least four general advantages that are associated with activity -based costing.
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Answer rating: 100% (QA)
b The information about the idle surgery capacity does have an impact on the calculations in part a In part a the calculations were based on the assumption that the total capacity supplied is 200000 s... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
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