2. Ralph Inc is considering a time-driven activity-based costing system. The fol

Question

2. Ralph Inc is considering a time-driven activity-based costing system. The following data is given: Inc. is considering a time-driven activity-based costing system. The following data is given Time per activity 1.80 hr 2.50 hr 1.30 hr 1.70 hr Activities Resources Supervision Supplies and uniforms Salaries Computer Monitor Total Total nursing hours (practical capacity) $ 9,000 25,000 42,000 10,000 39,000 $125,000 25.000 Treating patients Providing hygienic care Responding to requests Monitoring patients (1) Calculate capacity rate. (2) Determine four activity rates.

Explanation / Answer

1. Capacity Rates -

Total Resources Cost / Practical Capacity Hours

$125,000 / 25,000 Hrs = $5 per hour cost for working at full practical capacity.

2. Four Activities Rates -

Treating Patients - 1.8hr x $5 = $9 rate per activity

Providing hygienic Care - 2.5hr x $5 = $12.5 rate per activity

Responding to Request - 1.3hr x $5 = $8 rate per activity

Monitoring Patients - 1.7hr x $5 = $8.5 rate per activity

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