Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 9E
1
To determine
Activity based costing:
ABC is a system in which various activities are identified. At first, costs of activities are calculated and then such cost is allocated to all the products. Relationship among costs, products and activities, established under this system, helps in the allocation of cost process.
An activity rate for each activity cost pool.
2
To determine
Activity cost
Activity cost refers to the total cost that is incurred by each activity. This cost is calculated and then assigned to all the products with the use of a cost allocation base or measure.
To calculate:Total activity cost that will be assigned to city general and county general.
3
To determine
Purchasing behavior
Buying or purchasing
To describe: Purchasing behavior that would increase cost to serve the customers.
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Activity-Based Costing for a Service Company
Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:
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Activity Rate
Room and meals
$175
per day
Radiology
$247
per image
Pharmacy
$49
per physician order
Chemistry lab
$104
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Operating room
$720
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The activity usage information associated with the two patients is as follows:
Abel Putin
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6
days
11
days
Number of images
3
images
7
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Number of physician orders
5
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7
orders
Number of tests
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tests
5
tests
Number of operating room hours
4
hours
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a. Determine the activity cost associated with each patient.
Abel Putin
$fill in the blank 1
Cheryl Umit
$fill in the blank 2
Activity-Based Costing for a Service Company
Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:
Activity
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Room and meals
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per day
Radiology
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per image
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$38
per physician order
Chemistry lab
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per test
Operating room
$760
per operating room hour
The activity usage information associated with the two patients is as follows:
Abel Putin
Cheryl Umit
Number of days
5
days
11
days
Number of images
4
images
5
images
Number of physician orders
7
orders
9
orders
Number of tests
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tests
5
tests
Number of operating room hours
3
hours
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hours
a. Determine the activity cost associated with each patient.
Abel Putin
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Cheryl Umit
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Activity-Based Product Costing
Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients:
Patient Category
Driver
Normal
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Activity Rate
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Treatments
6,900
8,000
$4.00
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4,800
17,600
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32,000
80,000
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Monitoring patients
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6,000
72,000
3.00
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Normal
$
Intensive
$
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Chapter 4 Solutions
Introduction To Managerial Accounting
Ch. 4 - What are the three common approaches for assigning...Ch. 4 - Why does activity-based costing appeal to some...Ch. 4 - Why do departmental overheadrates something result...Ch. 4 - What are the four hierarchical levels of activity...Ch. 4 - Why activity-based costing is described as a...Ch. 4 - Why do overhead costs often shift from high-volume...Ch. 4 - What are the three major ways in which...Ch. 4 - What are the major limitations of activity-based...Ch. 4 - Prob. 1AECh. 4 - Prob. 2AE
Ch. 4 - Change the data in red so that the Data area looks...Ch. 4 - Prob. 1F15Ch. 4 - Prob. 2F15Ch. 4 - Prob. 3F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 5F15Ch. 4 - Prob. 6F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 8F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 13F15Ch. 4 - Prob. 14F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - ABC Cost Hierarchy L041 The following activities...Ch. 4 - Compute Activity Rates L042 Rustafson Corporation...Ch. 4 - Compute ABC Product Costs L043 Lamer Corporation...Ch. 4 - Contrast ABC and Conventional Product Costs L044...Ch. 4 - Assigning Overhead to Products in ABC L042, L043...Ch. 4 - Cost Hierarchy and Activity Measures L041 Various...Ch. 4 - Contrast ABC and Conventional Product Costs L042,...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Rocky Mountain Corporation makes two types of...Ch. 4 - Contrasting Activity-Based Costing and...Ch. 4 - Contrasting ABC and Conventional Product cost...Ch. 4 - ABC Cost Hierarchy L041 Mitchell Corporation...Ch. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Contrasting ABC and Conventional Product Costs...Ch. 4 - Contrast Activity-Based Costing and Conventional...Ch. 4 - Adria Company recently implemented an...
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