Problem:	7.9
Consider the following data for a primary care practice that provides two types of services, A and B:
Activity Data
Activity	Annual Costs	Cost Driver	Service A	Service B
Check-in	$ 100,000	Visit volume	7000	15000
Assessment	$ 250,000	Minutes per service	15	8
Diagnosis	$ 600,000	Minutes per service	20	10
Treatment	$ 1,200,000	Minutes per service	5	5
Check-out	$ 125,000	Visit volume	7000	15000
Billing	$ 250,000	Number of bills	3	1
Total	$ 2,525,000
a) Using ABC techniques, determine the allocation rate for each overhead activity.
		Activity Data per Service
Activity	Annual Costs (1)	Cost Driver	Service A	Service B	Total (2)	Allocation Rate (1) (2)
Check-in	$ 100,000	Volume	7,000	15,000	22,000	$4.55
Assessment		Minutes
Diagnosis		Minutes
Treatment		Minutes
Check-out		Volume
Billing		No. of bills
Total
b) Determine the overhead costs per visit for each type of service
			Service A	Service B
	Activity	Cost Driver	Allocation Rate	Consumption	Cost	Consumption	Cost
	Check-in	Volume	$4.55
	Assessment	Minutes
	Diagnosis	Minutes
	Treatment	Minutes
	Check-out	Volume
	Billing	No. of bills
	Total
c) Verify that the total annual costs aggregated from individual visit costs equal the total annual costs of the practice given in the table above.
	Service A	Service B	Total
	Cost per unit (from Part b)
	Volume (given)
	Total