FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow.
Budgeted Activity
Usage
1,000
500
2,000
Activity
Budgeted Cost Activity Cost Driver
Supplies
Surgical hours (SH)
Patient services.
Building cost
Number of patients.
Square feet.
The two main surgical units and their actual activity usage follow.
Actual Activity Usage
Service
General surgery
Orthopedic surgery
$ 200,000
37,500
300,000
Surgical
Hours
250
750
Supplies
Patent services
Building cost
Patients Square Feet
400
100
R
Required:
1. Compute activity rates using activity-based costing.
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each
surgery unit.
1. Compute activity rates using activity-based costing..
Activity
Budgeted Cost
720
1,280
Budgeted Activity Usage
Surgical hours
number of patients
square feet
Activity Rate
per surgical hour
per patient
per square foot
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery
unit
expand button
Transcribed Image Text:Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Budgeted Activity Usage 1,000 500 2,000 Activity Budgeted Cost Activity Cost Driver Supplies Surgical hours (SH) Patient services. Building cost Number of patients. Square feet. The two main surgical units and their actual activity usage follow. Actual Activity Usage Service General surgery Orthopedic surgery $ 200,000 37,500 300,000 Surgical Hours 250 750 Supplies Patent services Building cost Patients Square Feet 400 100 R Required: 1. Compute activity rates using activity-based costing. 2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit. 1. Compute activity rates using activity-based costing.. Activity Budgeted Cost 720 1,280 Budgeted Activity Usage Surgical hours number of patients square feet Activity Rate per surgical hour per patient per square foot 2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit
1. Compute activity rates using activity-based costing.
Activity
Budgeted Cost
Supplies
Patient services
Building cost
General surgery
Supplies
Patent services
Building costs
Orthopedic Surgery
Supplies
Patient services
Building cost
Budgeted Activity Usage
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery
unit.
Activity Usage-----
surgical hours
patients
square feet
Overhead cost per patient
surgical hours
number of patients i
square foot
-----Activity Usage---
surgical hours
patients
square feet
-Activity rate.
Activity Rate
----Activity rate-----
per surgical hour
per patient
per square foot
Allocated Cost
Allocated Cost
expand button
Transcribed Image Text:1. Compute activity rates using activity-based costing. Activity Budgeted Cost Supplies Patient services Building cost General surgery Supplies Patent services Building costs Orthopedic Surgery Supplies Patient services Building cost Budgeted Activity Usage 2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit. Activity Usage----- surgical hours patients square feet Overhead cost per patient surgical hours number of patients i square foot -----Activity Usage--- surgical hours patients square feet -Activity rate. Activity Rate ----Activity rate----- per surgical hour per patient per square foot Allocated Cost Allocated Cost
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