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# P6-30 - P6-30 Calculation of Meals& residential cost per...

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Unformatted text preview: P6-30 Calculation of Meals & residential cost per resident day: Total cost of meals and residential space Ã· Annual resident days = \$2,000,000 Ã· 21,900 = \$91.32 cost per day a. Total cost of medical services Ã· Annual assistance hours = Cost per hour \$2,500,000 Ã· 90,000 = \$27.78 per hour ABC cost per resident day based on annual assistance hours Cost per resident day (medical services cost plus food and residential cost): Class A: \$27.78 Ã— 15,000 = \$416,700 Ã· 8,760 = \$47.57 + \$91.32 = \$138.89 Class B: \$27.78 Ã— 20,000 = \$555,600 Ã· 6,570 = \$84.57 + \$91.32 = \$175.89 Class C: \$27.78 Ã— 22,500 = \$625,050 Ã· 4,380 = \$142.71 + \$91.32 = \$234.03 Class D: \$27.78 Ã— 32,500 = \$902,850 Ã· 2,190 = \$412.26 + \$91.32 = \$503.58 b. Total cost of medical services Ã· No. of assistance contacts = Cost per contact \$2,500,000 Ã· 216,000 = \$11.57 ABC cost per resident day based on number of assistance contacts Cost per resident day (medical services cost plus food and residential cost): Class A: \$11.57 Ã— 60,000 = \$694,200 Ã· 8,760 = \$79.25 + \$91.32 = \$170.57 Class B: \$11.57 Ã— 52,000 = \$601,640 Ã· 6,570 = \$91.57 + \$91.32 = \$182.89 Class C: \$11.57 Ã— 52,000 = \$601,640 Ã· 4,380 = \$137.36 + \$91.32 = \$228.68 Class D: \$11.57 Ã— 52,000 = \$601,640 Ã· 2,190 = \$274.72 + \$91.32 = \$366.04 c. Under the current costing system the cost per resident day is \$91.32 (or [\$2,500,000 + \$2,000,000] Ã· 21,900 days) per day for all resident classifications. While classifications C and D account for the lowest number of resident days, they account for the largest amount of assistance hours and almost the same amount of assistance contacts as the other classifications. The best cost driver is the driver that has the greatest influence on cost. Intuitively, both assistance hours and contacts would seem to influence costs; however, since much of the cost is probably related to staff time, annual assistance hours is probably a better cost driver. ...
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P6-30 - P6-30 Calculation of Meals& residential cost per...

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