80.2K

Verified Solution

Link Copied!

Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 40%. 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 Professional salaries Patient services and supplies Building cost Cost Driver Driver Quantity 11,200 Cost $2,128,000 Professional hours 36,720 Number of patients 720 210,600 Square feet 1,620 The two main surgical units and their related data follow. Service General surgery Orthopedic surgery Hours Square Feet Patients 3,100 8,100 660 960 460 260 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 driver Overhead Activity driver Overhead assigned Activity Overhead Cost Activity Drivers Activity Rate incurred assigned incurred Professional salaries Patient services and supplies Building cost Professional hours of patients Square feet

Answer & Explanation Solved by verified expert

See Answer