Problem:
In the past, Casiopia Hospital allocated all of its overhead costs to patients based on nursing time. Casiopia has decided to switch to an activity based costing system using three activity cost pools. Information related to the new system is as follows:
|
|
|
Estimated Overhead
|
|
|
Activity Cost Pool
|
Activity Measure
|
Cost
|
Estimated Activity
|
|
Registration
|
Number of patients
|
$75,000
|
1,000 patients
|
|
Patient care
|
Nursing time
|
$900,000
|
150,000 hours
|
|
Billing
|
Number of bills
|
$120,000
|
2,500 bills
|
Data concerning two patients follows:
|
Patient
|
Nursing time
|
Number of bills
|
|
Wells
|
100 hours
|
2
|
|
Muncie
|
60 hours
|
3
|
To determine a price for its services, Casiopia Hospital takes the total cost assigned to a patient and multiplies that number by two. Compared to the old system, which patients above will be charged more under the new activity-based costing system?
A) neither patient will be charged more
B) Wells
C) Muncie
D) both Wells and Muncie