MMPA512 management accounting

Your presentation and consultants report to the management team of the Moa Orthopaedic Clinic, covering the following: a) Based on last year?s actual activity levels (2,800 treatments, 3,400 care hours, 7,750 requests and 5,500 monitoring checks) demonstrate how the traditional ABC system would determine the ONS resources used by orthopaedic patients and the cost of any identified spare capacity. b) Using TDABC principles, compute the „cost per time unit? and derive revised activity burden rates for the four key nursing activities. Explain why they differ to the burden rates derived under traditional ABC. c) Using the new TDABC burden rates; determine the cost assigned to each activity and the total ONS capacity used (in hours). Calculate the estimated hours of unused ONS capacity and the associated cost. Evaluate this information and suggest appropriate management action. d) The ONS supervisor is keen to introduce computerised “self-monitors” which enable patients to take their own blood pressure and temperature and automatically updates their records. These monitors are considered “fool proof” and the supervisor is happy to use them to ease the heavy burden of monitoring on nurses. (Note that as a backup check nurses will still take each patient’s readings at least once per day). The “selfmonitors” will be rented, will only add $27,000 to the annual costs of the ONS and will reduce the unit time for the activity “monitoring patients” from 0.75 hours per check to 0.5 hours per check. Estimate what effect this initiative will have on the assignment of ONS costs and the capacity used (in hours). Recalculate the hours of unused capacity and the associated cost, interpret the results and advise management on the suggestion to introduce “self-monitors