[kawsarhabib]

Dovahkin(DK) is a private hospital carrying out two types of procedures on patients. Each type of procedure incurs the
following direct costs:
Procedure A B
$ $
Surgical time and materials 1,200 2,640
Anaesthesia time and materials 800 1,620
DKcurrentlycalculatestheoverheadcostperprocedurebytakingthetotaloverheadcostandsimplydividingitby the
number of procedures, then rounding the cost to the nearest 2 decimal places. Using this method, the total cost is
$2,475·85 for Procedure A and $4,735·85 for Procedure B.
Recently, another local hospital has implemented activity-based costing (ABC). This has led the finance director at BH to
consider whether this alternative costing technique would bring any benefits to DK. He has obtained an analysis of
DK’s total overheads for the last year and some additional data, all of which is shown below:
Cost Cost driver $
Administrative costs Administrative time per procedure 1,870,160
Nursing costs Length of patient stay 6,215,616
Catering costs Number of meals 966,976
General facility costs Length of patient stay 8,553,600
–––––––
Total overhead costs 17,606,352
–––––––
Procedure A B
No. of procedures 14,600 22,400
Administrative time per procedure (hours) 1 1·5
Length of patient stay per procedure (hours) 24 48
Average no. of meals required per patient 1 4
Required:
(a) Calculate the full cost per procedure using activity-based costing.
(b) Making reference to your findings in part (a), advise the finance director as to whether activitybased costing should be implemented at Dovahkin.

how can i calculate this

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