CC3123-Cost Analysis Question 5: Textbook Page 136, Problem 42. (Cost drivers; ABC; analysis) Boerne Community Hospital has been under increasing pressure to b hospital's current pricing system is ad hoc, based on pricing norms for the geographical are Name e accountable for its patient charges. The a; only direct costs r surgery, medication, and other treatments are explicitly considered. The hospital's controller has suggested that the hospital improve pricing policies by seeking a tighter relationship between costs and pricing. This approach would make prices for services less arbitrary. As a first step, the controller has determined that most costs can be assigned to one of three cost pools. The three cost pools follow along with the estimated amounts and activity drivers. Activity Center Professional Salaries $13,125,000 Professional Hours Building costs Risk Management Costs Activity Driver Quantity 75000 56250 2,500 $6,187,500 Square Feet Used $850,000 Patients Served The hospital provides service in three broad categories. The services follow with their volume measures for the activity centers. 3,750 70,000 1,250 Calculate the costs for the three services provided by the hospital under 1) traditional costing method by using Service Surgery Housing Patients Outpatient Care Professional Hours Square Feet Number of Patients 500 1,250 750 12,500 27,500 16,250 professional hours as the activity level; and 2) ABC method