Surgery Center is an outpatient surgical clinic that was profitable for many yea

Question

Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 30%. 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 clinic's three activity cost pools and their cost drivers follow. The two main surgical units and their related data follow * Orthopedic surgery requires more space for patients, supplies, and equipment. Required: Compute the cost per cost driver for each of the three activity cost pools. Use the results to allocate costs 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

Explanation / Answer

Statement showing cost per cost driver

Statement showing cost allocation and cost per pateint

Cost driver Amount Basis Qty Cost per driver Professional salaries 1363000 Professional hrs 9400 145 per hour Pateint service and supplies 22680 No. of pateints 540 42 per pateint Building cost 122400 Square feet 1440 85 per sqr feet

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