We Care is an outpatient surgical clinic that was profitable for many years, but
ID: 2558354 • Letter: W
Question
We Care is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. 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 cost centers and their cost drivers follow.
3.
value:
15.00 points
Required information
References
WorksheetDifficulty: 3 HardLearning Objective: 21-P2 Assign overhead costs using activitybased costing.
Check my work
4.
value:
15.00 points
Required information
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 "$" sign in your response.)
We Care is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinic’s three cost centers and their cost drivers follow.
Explanation / Answer
Compute the cost per cost driver for each of the three cost centers. (Round your answers to nearest dollar amount. Omit the "$" sign in your response.)
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
Activity rate Professional salaries (1700000/11000) 155 per hour Patient services & supplies (24000/700) 34 per patients Building cost (151000/1500) 101 per sq feetRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.