Question: I need help with a, b, and c Proper Care Health System wishes to determine the product costs of the three procedures that it performs.

I need help with a, b, and c
Proper Care Health System wishes to determine the product costs of the three procedures that it performs. Its overhead has been separated into the following three major activities that, along with their activity costs, are revealed below. Activities Activity Costs Scheduling and admitting Housekeeping ... Nursing ... Total $72,000 .$685,000 $635,260 $1,392,260 The following activity drivers, along with their expected usage, are shown below: Activity drivers Expected activities Weighted care units. ...................38,500 Number of patients. Number of patient-days.. .....................5,750 Proper Care Health collected patient information for these three procedures as shown below: Procedure A Procedure B Procedure C Number of patients ..... ..................210 ................ 500............... 900 Average length of stay (days) ........ ................... 4..................... 3 Hence, patient-days. ...................1,050 ............. 2,000.............. 2,700 Weighted care units ..........................15,000 ............. 4,500............ 19,000 Private insurance reimburses the hospital for all three procedures at a fixed daily rate of $300 per patient-day. Scheduling and admitting includes patient admissions, billing and other administrative tasks. Housekeeping includes food, cleaning the room, changing the linen, etc. A weighted care unit is a measure of nursing resources used to care for patients. The weighted care unit is determined by multiplying a weight by the number of patient-days. For example, patients feeding themselves require little nursing assistance (a weight of one), while intravenous feeding requires more significant nursing involvement (a weight of three). A weighted care unit is the product of the weights of nursing activity and the number of patient-days. For example, a patient who stayed in the health system for 8 days and was provided nursing assistance with a weight = 3, would have received 24 weighted care nursing units. 6 Patient-days" are determined by multiplying the number of patients by the average length of stay in the health system, i.e., two "patient-days" represents one patient staying in the health system for two days or two patients staying in the health system for one day. Page 2 Required: Using the facts from the case, please respond to ne facts from the case, please respond to the following independent questions and show all workings: a. Assuming that the number of patient-days was the only cost driver, determine the profitability for each of the three procedures. b. Using activity-based costing, choose an activity driver for each of the three activities and explain why you chose them. (Hint: Please provide three paragraphs, one for each activity. Now, for each activity, you need to designate the activity driver you chose, the reasons why you chose it and the reasons why the other activity drivers were not as good as the one you chose.)? Using the activity drivers determined in Part b. above, determine the profitability for each of the three procedures. d. Why are the results obtained in Part c. different from those obtained in Part a.? Please explain 7 Please see page 5 for some helpful hints for resolving the issues in this part
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
