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

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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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