Mmpa512 Advanced Management Accounting Assessment Answer

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 systemwould determine the ONSresources 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)Usingthenew 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 introducecomputerised “self-monitors” which enable patients to take their own blood pressure and temperature and automatically updatestheir 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 “self-monitors” 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 hoursper 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 hoursof unused  capacity  and  the  associated  cost,  interpret  the  results  and advise  management on the suggestion to introduce“self-monitors