Step 1. Identify the relevant activities.

Step 2. Determine annual cost of each activity.

Step 3. Determine the cost drivers for the activity.

Step 4. Collect activity data for each service.

Step 5. Determine the allocation rate for each activity.

Step 6. Determine the total cost for each service.

KDDONlmw-DWNH Problem 14.2 ACVITV-BASED-COSHNG (ABC) EXAM PlE Step 1. Identify the relevant activities. Step 2. Determine annual cost of each activity. Step 3. Determine the cost drivers for the activity. Step 4. Collect activity data for each service. Step 5. Determine the allocation rate for each activity. Activity Check-in Assessment Diagnosis Treatment Prescription Check-out Billing Total annual costs Annual Cons 50,000 75,000 250,000 450,000 2,500 50,000 150,000 Step 6. Determine the total cost for each service. Activity Check-in Assessment Diagnosis Treatment Prescription Check-out Billing Cost Driver Number of visits Number of minutes per visit Number of minutes per visit Number of minutes per visit Drugs prescribed per visit Number of visits Number ofbills per visit Cost Driver Number of visits Number of minutes per visit Number of minutes per v Number of minutes per visit Drugs prescribed per visit Number of visits Number ofbills per visit I Total costs per service I I Service A 5 000 10 10 0.5 5000 Name Activity Data A Units Service B 5000 10 15 20 2 5000 2 Service A Units Cost 1 5 10 10 0.5 1 1 Points [72 B Units Total Units 10,000 10,000 Service 3 Units Cost Allocation Rate 5.00