# Time driven activity based costing calculates costs

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Time-Driven Activity-Based Costing calculates costs based on the amount of time is spent by each person involved in a procedure. First, a capacity cost rate is determined by dividing the total annual cost of a person by the number of available minutes annually. Surgeon ASR RN CA Capacity cost rate (dollar per minute) 6 1 1.50 0,80 Next, the number of minutes spent on each diagnosis is multiplied by the determined rates. Medical diagnosis cost per patient visit surgeon ASR RN CN TDABC cost Plagiocephaly 108 8 34,5 4 154,50 Neoplasm skin excision 132 55,5 30 4 221,50 Craniosynostosis 240 10,5 34,5 8 293 The margin is calculated by subtracting the average reimbursement amount with the TDABC cost. Medical diagnosis cost per patient visit Actual charge Average reimbursement TDABC cost TDABC margin Plagiocephaly 350 224 154,50 69,5 Neoplasm skin excision 350 224 221,50 2,5 Craniosynostosis 350 224 293 -69 4.What explains the difference in costs using the two methods?
5. Suppose DPOS dedicates the following resources to handle all office visits: 2.5 surgeons, 2 Ambulatory Service Representatives, 2 Registered Nurses and 1 Clinical Assistant. During