【正确答案】Beckley Hill

【正确答案】When activity-based costing (ABC) is used as in (a) above, the cost for Procedure A is approximately $2,297 as comparedto the approximate $2,476 currently calculated by BH. For Procedure B, the cost using ABC is approximately $4,853 ascompared to the approximate current cost of $4,736. Hence, the cost of Procedure A goes down using ABC and the cost ofProcedure B goes up. This reflects the fact that the largest proportion of the overhead costs is the nursing and general facilitycosts. Both of these are driven by the number of patient hours for each procedure. Procedure B has twice as many patienthours as Procedure A. Whilst this is not taken into account when the overheads are simply being divided by the number ofprocedures and allocated to each product, it would be if ABC were adopted instead. Hence, the allocation of costs wouldmore fairly reflect the use of resources driving the overheads. However, ABC can be a lot of work to implement, and whilst the comparative costs are different, they are not significantlydifferent. Given that ABC is costly to implement, it may be that a similar allocation in overheads can be achieved simply byusing a fairer basis to absorb the costs. If patient hours are used as the basis of absorption instead of simply dividing theoverheads by the number of procedures, the costs for Procedures A and B would be $2,296 and $4,853 (W1). Hence, thesame result can be achieved without going to all of the time and expense of using ABC. Therefore BH should not adopt ABCbut use this more accurate basis of absorbing overheads instead. Working 1 $17,606,352/1,425,600 hours = $12·35 per hour. Therefore absorption cost for A = $1,200 + $800 + (24 x $12·35) = $2,296. Same calculation for B but with 48 hours instead.