Question: Refer to the data in Problem 4-
Refer to the data in Problem 4-32. The clinic has identified three types of patients: those with no heart disease, those with mild heart disease, and those with severe heart disease. The following additional data are provided:
Required:
1. Using the activity costs calculated from Requirement 1 of Problem 4-32 (or calculate them if necessary), calculate the unit cost of servicing each type of patient using traditional ABC.
2. Using TDABC-derived activity rates, calculate the unit cost of servicing each type of patient.
3. Using DBC, calculate the unit cost of servicing each type of patient.
4. Suppose that a medical consultant proposes a new patient-processing system that will shorten diagnostic and treatment times but would require more skilled nurses and technicians as well as an equipment upgrade. However, the total practical capacity would remain the same, at 20,000 hours. Total resource costs are predicted to increase by $100,000. The consultant estimates that the cycle times for each patient type would be reduced from 3 to 2 hours, 5.6 to 4.5 hours, and 11 to 9 hours. The physicians that own the clinic have expressed a willingness to implement the changes, provided that the unit cost of servicing each patient type decreases. Use DBC to estimate the new unit costs. Should the clinic implement the new system? Discuss the advantages of DBC for this analysis over ABC and TDABC. Finally, identify the data analytic types (descriptive, diagnostic, predictive, or prescriptive) that apply for this analysis (see Exhibits 2.5 and 2.6, pp. 37, 40, for a review of data analytic types). Note: More than one analytic type might apply
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