As controller for Edmonton Cosmetic Hospital, you are looking into the possibility of utilizing Activity- Based-Costing to assign overhead costs to patient surgeries. As a first step, you have determined that overhead costs can be assigned to one of the following three activities:
Hospital services are classified into several broad categories, two of which are In-Patient Care and Out- Patient Care. The volume measures for In-Patient and Out-Patient Care are as follows:
(A) Under a traditional overhead allocation method
i. What would be the Predetermined Overhead Rate based on direct labour hours.
ii. What would be the allocation of overhead for In-Patient care and Out-patient care.
(B) Under ABC Costing
i. What is the allocation rate for each activity (Professional salaries, Building costs, and Risk management?
ii. What is the total allocation overhead for In-patient care and Outpatient care? Show calculations.