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Mercy Hospital plans to use activity-based costing to assignhospital indirect costs to the care of patients. The hospitalhas indentified the following activities and activity rates for thehospital indirect costs:

Activity Activity Rate

Room andmeals $165 per day

Radiology $250 per image

Pharmacy $45 per physician order

Chemistrylab $85 per test

Operatingroom $680 per operating room hour

The records of two representative patients were analyzed, usingthe activity rates. The activity information associated withthe two patients is as follows:

PatientMalone Patient Talbot

Number ofdays 8days 4 days

Number ofimages 5images 3 images

Number of physicianorders 6orders 2 orders

Number oftests 7tests 3 tests

Number of operating roomhours 4.5hours 2 hours

Determine the activity cost associated with each patient.
Why is the total activity cost different for the twopatients?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9992448

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