Akey Hospital bases its budgets on patient-visits.The hospital's static budget for March appears below: The total overhead cost at an activity level of 3,000 patient-visits per month should be:

Question

Akey Hospital bases its budgets on patient-visits.The hospital's static budget for March appears below:  The total overhead cost at an activity level of 3,000 patient-visits per month should be:

Quizplus · Accepted Answer

We can use the high-low method to calculate the variable cost per patient-visit and then use it to calculate the total overhead cost at an activity level of 3,000 patient-visits per month.

Variable cost per patient-visit = (Cost at High Activity Level - Cost at Low Activity Level) / (High Activity Level - Low Activity Level) = ($101,400 - $83,700) / (3,200 - 2,800) = $37.50

Using the variable cost per patient-visit, we can calculate the total overhead cost at an activity level of 3,000 patient-visits per month as follows:

Total overhead cost = Fixed overhead cost + (Variable cost per patient-visit x Activity level)
= $79,800 + ($37.50 x 3,000)
= $92,100

Therefore, the best choice is B.

Akey Hospital Bases Its Budgets on Patient-Visits