Exercise 4-15 Activity-based costing LO P3 Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinic's three activity cost pools and their cost drivers follow. Activity Cost Pool Cost Cost Driver Driver Quantity Professional salaries $1,768,000 Professional hours 10,400 Patient services and supplies 30,080 Number of patients 640 Building cost 169, 400 square feet 1,540 The two main surgical units and their related data follow. Service General surgery Orthopedic surgery Hours 2,700 7,700 Square Feet* 620 920 Patients 420 220 * Orthopedic surgery requires more space for patients, supplies, and equipment. Required: 1. & 2. Compute the cost per cost driver for each of the three activity cost pools. Use the results to allocate costs to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units. General Surgery Orthopedic Surgery Activity Overhead Cost Activity Drivers Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Professional salaries Patient services and supplies Building cost Professional hours Number of patients Square feet