In the past, Casiopia Hospital allocated all of its overhead costs to patients based on nursing time. Casiopia has decided to switch to an activity based costing system using three activity cost pools. Information related to the new system is as follows:
Estimated Overhead
Activity Cost Pool
Activity Measure
Cost
Estimated Activity
Registration
Number of patients
$75,000
1,000 patients
Patient care
Nursing time
$900,000
150,000 hours
Billing
Number of bills
$120,000
2,500 bills
Data concerning two patients follows:
Patient
Nursing time
Number of bills
Wells
100 hours
2
Muncie
60 hours
3
To determine a price for its services, Casiopia Hospital takes the total cost assigned to a patient and multiplies that number by two. Compared to the old system, which patients above will be charged more under the new activity-based costing system?
A) neither patient will be charged more
B) Wells
C) Muncie
D) both Wells and Muncie