Answer:
The total Costs allocated to General surgery is $ 867500.
The total Costs allocated to Orthopedic surgery is $1951500.
Average Cost per patient of General surgery= $1735
Average Cost per patient of Orthopedic surgery= $6505
Explanation:
Surgery Center
Activity Cost Pool Cost Cost Driver Driver Quantity
Professional Salaries 2,520,000 Professional hours 12,000
Patient Ser. & Supplies 44,000 Number of patients 800
Building cost 255,000 Square feet 1,700
Service Hours Square Feet Patients
General surgery 3,500 700 500
Orthopedic surgery 8,500 1,000 300
Cost Per Cost Driver
Professional Salaries/ Professional hours =2,520,000 /12,000=210
Patient Ser. & Supplies/ Number of patients = 44,000 /800= 55
Building cost / Square feet =255,000 /1700= 150
We apply the rates to both the surgeries to get the costs.
Total Costs
Service Hours Square Feet Patients Total
General surgery 3,500*210 700*150 500*55
Costs $ 735000 105000 27500 867500
Orthopedic surgery 8,500*210 1,000*150 300*55
Costs $ 1785000 150,000 16500 1951500
The total Costs allocated to General surgery is $ 867500.
The total Costs allocated to Orthopedic surgery is $1951500.
Total No of Patients = 800
Total Costs = $ 2819,000
We find the average by dividing the total cost by the number of the patients.
Average Cost Rate per patient = 2819,000/800= 3523.75
Average Cost per patient of General surgery= 867500/500= $1735
Average Cost per patient of Orthopedic surgery=1951500/300= $6505
