Looking for just the total on #2 We Care is an outpatient surgical clinic that w

ID: 2380259 • Letter: L

Question

Looking for just the total on #2

We Care is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 60%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinicâs three cost centers and their cost drivers follow.

Use the results from part 1 to allocate costs from each of the three cost centers to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Cost Center Cost Cost Driver Driver Quantity Professional salaries $ 1,400,000 Professional hours 9,000 Patient services and supplies 26,000 Number of patients 600 Building cost 149,000 Square feet 1,400

Explanation / Answer

Cost Center

Cost per Driver

Professional salaries

per hour

Patient services & supplies

per patient

Building cost

per sq. ft

Total

Average cost per patient

General surgery

$434,000

Orthopedic surgery

$ 1,144,200