A. Determine the predetermined operating room overhead rate for the year. B. Bill Harris had a five-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (A)? C. During January, the operating room was used 240 hours. The actual overhead costs incurred for January were $67,250. Determine the overhead under- or overapplied for the period.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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EX 16-11 Predetermined factory overhead rate
Obj. 2
Poehling Medical Center has a single operating room that is used by local physicians to perform
surgical procedures. The cost of using the operating room is accumulated by each patient pro-
cedure and includes the direct materials costs (drugs and medical devices), physician surgical
time, and operating room overhead. On January 1 of the current year, the annual operating
room overhead is estimated to be:
Disposable supplies
Depreciation expense
$299,600
75,000
Utilities
32,000
Nurse salaries
278,500
Technician wages
126,900
$812,000
Total operating room overhead
The overhead costs will be assigned to procedures, based on the number of surgical room
hours. Poehling Medical Center expects to use the operating room an average of eight hours
per day, seven days per week. In addition, the operating room will be shut down two weeks
per year for general repairs.
A. Determine the predetermined operating room overhead rate for the year.
B. Bill Harris had a five-hour procedure on January 22. How much operating room overhead
would be charged to his procedure, using the rate determined in part (A)?
C. During January, the operating room was used 240 hours. The actual overhead costs incurred
for January were $67,250. Determine the overhead under- or overapplied for the period.
Transcribed Image Text:EX 16-11 Predetermined factory overhead rate Obj. 2 Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient pro- cedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies Depreciation expense $299,600 75,000 Utilities 32,000 Nurse salaries 278,500 Technician wages 126,900 $812,000 Total operating room overhead The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. A. Determine the predetermined operating room overhead rate for the year. B. Bill Harris had a five-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (A)? C. During January, the operating room was used 240 hours. The actual overhead costs incurred for January were $67,250. Determine the overhead under- or overapplied for the period.
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