Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Activity Budgeted Cost Activity Cost Driver Supplies Surgical hours (SH) Patient services Number of patients. Building cost 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 Patients 400 Square Feet 720 1,280 1. Compute activity rates using activity-based costing. Budgeted Activity Usage 1,000 500 2,000 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.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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