Use the results from part 2 to allocate costs from each of

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Reference no: EM13573763

Health Co-op is an outpatient surgical clinic that 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 cost centers and their cost drivers follow.

Cost Center	Cost	Cost Driver	Driver Quantity
Professional salaries	$2,223,000	Professional Hours	11,400
Patient services and supplies	38,480	Number of patients	740
Building cost	221,400	sq feet	1,640

The two main surgical units and their related data follow.

Service	Hours	Sq Feet	Patients
General Surgery	3,200	670	470
Orthopedic Surgery	8,200	970	270

1. Assume costs are allocated based on number of patients. Compute the average cost per patient,

2. Compute the cost per cost driver for each of the three cost centers.

3. Use the results from part 2 to allocate costs from each of the three cost centers to the general surgery unit. Compute total cost and average cost per patient for the general surgery unit.

Reference no: EM13573763

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