Problem - 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 Intensive Activity Rate
Treating patients Treatments 8,400 8,500 $4.00
Providing hygienic care Hygienic hours 6,300 17,600 5.00
Responding to requests Requests 32,000 80,000 2.00
Monitoring patients Monitoring hours 6,000 72,000 3.00
Required:
1. Determine the total nursing costs assigned to each patient category.
2. Output is measured in patient days. Assuming that the normal patient category uses 8,000 patient days and the intensive patient category uses 6,400 patient days, calculate the nursing cost per patient day for each type of patient. Round your answers to the nearest cent.
3. Conceptual Connection: The supervisor of the surgical ward has suggested that patient days is the only driver needed to assign nursing costs to each type of patient. Calculate the charge per patient day using this approach. Round your answer to the nearest cent.