Chapter 4 Homework Question 14

Activity-based costing for a service company Crosswinds 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 for the hospital indirect costs: Activity Activity Rate Room and meals $260 per day Radiology $210 per image Pharmacy $40 per physician order Chemistry lab $90 per test Operating room $930 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 6 days 2 days Number of images 6 images 4 images Number of physician orders 6 orders 2 orders Number of tests 5 tests 2 tests Number of operating room hours 6 hours 3 hours This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. a. Determine the activity cost associated with each patient. Abel Putin Cheryl Umit b. Why is the total activity cost different for the two patients? Abel Putin apparently had a different condition that required more extensive treatment. Thus, the activity cost to Abel Putin is more than the activity cost of the other patient