Reference no: EM13508690
Part 1.
Please respond to the following questions of implementing activity data-driven cost components for Health Care.
What steps are involved in planning the costing framework?
How much time should be expended on account review?
What is fixed cost as defined for Activity-Based-Costing("ABC")
What variable cost is as defined for Activity-Based-Costing?
What direct cost is as defined for Activity-Based-Costing?
What indirect cost is as defined for Activity-Based-Costing?
Part 2.
Wagner Hospital is trying to decide whether to add a new service to their wide mix of services. The new service would be done in the existing hospital emergency department and would require no remodeling. Wagner's accountant, Mr. Beame, has prepared a projected financial report showing a $100,000 loss for the service. He is therefore against the new service. However, Dr. Koch of the emergency department points out that the report allocates $100,000 of existing operating room depreciation and $50,000 of the salary of existing administrators to the new service.
A. Based on the information given here, should the hospital undertake the new service? Briefly, why or why not?
B. Regardless of your answer to Part a, assume that the chairman of the board of trustees, D. Dinkins, insists that we offer the service. Should the emergency department have to bear the loss? If yes, explain why. If no, what alternative would you suggest? Will that alternative be fair and acceptable to other department heads? Be as brief as possible.
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