Question

The administrator of Hope Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows:

1	Activities	Activity Cost
2	Patient registration	$6,400.00
3	Verifying patient information	9,400.00
4	Assigning patients	12,800.00
5	Searching/waiting for doctor	8,000.00
6	Doctor test	4,600.00
7	Waiting for transport	17,600.00
8	Transporting patients	15,900.00
9	Verifying lab orders	14,300.00
10	Searching for equipment	7,800.00
11	Incorrect labs	9,000.00
12	Lab tests	9,300.00
13	Counting supplies	16,900.00
14	Looking for supplies	5,200.00
15	Staff training	2,800.00
16	Total	$140,000.00

Required:

1.

Classify the activities into prevention, appraisal, internal failure, external failure, and other patient care activities. Classify the activities into value-added and non-value-added activities.

2.

Use the activity cost information to determine the percentages of total ER costs that are prevention, appraisal, internal failure, external failure, and other patient care activities.*

3.

Determine the percentages of the total ER costs that are value- and non-value-added.*

4.

Interpret the information.

* Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Answer 1