Setup is reengineered so that it takes 60% of the original cost per setup. n Production control software will allow production control effort and cost per production rur to decline by 60%. Moving distance was reduced by 40 %, thus reducing the cost per move by the same amount a. Determine the revised activity cost per unit under the proposed changes. b. Did these improvements reduce the activity cost per unit? C. What cost per unit for setup would be required for the solution in (a) to equal the base solution? MAD 4-5 Analyze Lancaster County Hospital Obj. 7 Lancaster County Hospital uses activity-based costing to determine the cost of serving patients. The hospital identified common treatments and developed the activity-based cost per patient by treat- ment. The activities and activity rates fora patient receiving coronary bypass surgery are as follows: Activity Activity Rate Admission $150 per admission $3,000 per hour $50 per nursing care unit $100 per discharge Operating room Nursing Discharge Nursing care units are measures of time and effort to perform nursing duties, such as providing IV care, checking vital signs, and administering drugs. It is determined that there are an aver- age of 10 nursing care units per patient day in the hospital for a coronary bypass. The average bypass patient is in the hospital for 6 days. The bypass procedure requires an average of 3 hours of operating room time. a. Determine the activity cost per patient for the coronary bypass treatment. b. Assume the hospital was able to make improvements such that the average length of stay in the hospital for the bypass was reduced from 6 days to 5 days. Further assume that additional improvements in medical technology reduced the operating room time for a hours. Determine the activity cost per patient for the coronary bypass treatment under these revised conditions. What is the cost improvement? bypass to 2/

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a. Determine the activity cost per patient for the coronary bypass treatment.

Activity cost per patient $

b. Assume the hospital was able to make improvements such that the average length of stay in the hospital for the bypass was reduced from 6 days to 5 days. Further assume that additional improvements in medical technology reduced the operating room time for a bypass to 2½ hours. Determine the activity cost per patient for the coronary bypass treatment under these revised conditions. What is the cost improvement?

The cost of treating a patient for a coronary bypass declined from $ to $, or $.

Setup is reengineered so that it takes 60% of the original cost per setup.
n
Production control software will allow production control effort and cost per production rur
to decline by 60%.
Moving distance was reduced by 40 %, thus reducing the cost per move by the same amount
a. Determine the revised activity cost per unit under the proposed changes.
b. Did these improvements reduce the activity cost per unit?
C. What cost per unit for setup would be required for the solution in (a) to equal the base
solution?
MAD 4-5 Analyze Lancaster County Hospital
Obj. 7
Lancaster County Hospital uses activity-based costing to determine the cost of serving patients. The
hospital identified common treatments and developed the activity-based cost per patient by treat-
ment. The activities and activity rates fora patient receiving coronary bypass surgery are as follows:
Activity
Activity Rate
Admission
$150 per admission
$3,000 per hour
$50 per nursing care unit
$100 per discharge
Operating room
Nursing
Discharge
Nursing care units are measures of time and effort to perform nursing duties, such as providing
IV care, checking vital signs, and administering drugs. It is determined that there are an aver-
age of 10 nursing care units per patient day in the hospital for a coronary bypass. The average
bypass patient is in the hospital for 6 days. The bypass procedure requires an average of 3 hours
of operating room time.
a. Determine the activity cost per patient for the coronary bypass treatment.
b. Assume the hospital was able to make improvements such that the average length of stay in
the hospital for the bypass was reduced from 6 days to 5 days. Further assume that additional
improvements in medical technology reduced the operating room time for a
hours. Determine the activity cost per patient for the coronary bypass treatment under these
revised conditions. What is the cost improvement?
bypass to 2/

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