Determine the activity cost associated with each patient

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Reference no: EM132690687

Problem - Activity-based costing for a hospital

Valley Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:

Activity

Activity Rate

Room and meals 

$220 per day

Radiology 

$290 per image

Pharmacy 

$ 45 per physician order

Chemistry lab

$ 85 per test

Operating room

$920 per operating room hour

The activity usage information associated with the two patients is as follows:

 

Patient Barns

Patient Powell

Number of days

8 days

3 days

Number of images

5 images

2 images

Number of physician orders

6 orders

4 orders

Number of tests

5 tests

2 tests

Number of operating room hours

5.5 hours

1.5 hours

Required -

a. Determine the activity cost associated with each patient.

b. Why is the total activity cost different for the two patients?

Reference no: EM132690687

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