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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.SurgeonASRRNCACapacity cost rate (dollar per minute)611.500,80Next, the number of minutes spent on each diagnosis is multiplied by the determined rates.Medical diagnosis cost per patient visitsurgeonASRRNCNTDABC costPlagiocephaly108834,54154,50Neoplasm skin excision13255,5304221,50Craniosynostosis24010,534,58293The margin is calculated by subtracting the average reimbursement amount with the TDABC cost.Medical diagnosis cost per patient visitActual chargeAverage reimbursementTDABC costTDABC margin Plagiocephaly350224154,5069,5Neoplasm skin excision350224221,502,5Craniosynostosis350224293-694.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