Healthy Solutions, Inc., is considering a time-driven activity based costing sys
ID: 2546640 • Letter: H
Question
Healthy Solutions, Inc., is considering a time-driven activity based costing system. The following data is given:
Resources
Activities
Time per activity
Supervision
$ 93,000
Treating patients
1.50 hr
Supplies and uniforms
125,000
Providing hygienic care
2.00 hr
Salaries
542,500
Responding to requests
1.10 hr
Computer
15,000
Monitoring patients
1.35 hr
Monitor
35,750
Total
$811,250
Total nursing hours
(practical capacity)
25,250
What is the capacity cost rate? (Round the answer to two decimal places.)
$3.60 per hour
$32.13 per hour
$22.5 per hour
$94.5 per hour
Resources
Activities
Time per activity
Supervision
$ 93,000
Treating patients
1.50 hr
Supplies and uniforms
125,000
Providing hygienic care
2.00 hr
Salaries
542,500
Responding to requests
1.10 hr
Computer
15,000
Monitoring patients
1.35 hr
Monitor
35,750
Total
$811,250
Total nursing hours
(practical capacity)
25,250
Explanation / Answer
Calculation of capacity cost rate:
Capacity cost rate= Total cost/total nursing hours
= 811250/25250=32.13
So correct answer is b) $32.13 per hour
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