Dr. Alyx Hemmings is employed by Mesa Dental. Mesa Dental recently installed a computerized job-order costing system to help monitor the cost of its services. Each patient is assigned a job number when he or she checks in with the receptionist. The receptionist-bookkeeper notes the time the patient enters the treatment area and when the patient leaves the area. This differ-ence between the entry and exit times is the number of patient hours used and the direct labor time assigned to the dental assistant. (A dental assistant is constantly with the patient.) Thedirect labor time assigned to the dentist is 50 percent of the patient hours. (The dentist typically splits her time between two patients.) The chart filled out by the dental assistant provides additional data that is entered into the computer. For example, the chart contains service codes that identify the nature of the treat-ment, such as whether the patient received a crown, a filling, or a root canal. The chart not only identifies the type of service but its level as well. For example, if a patient receives a filling, thedental assistant indicates (by a service-level code) whether the filling was one, two, three, or four surfaces. The service and service-level codes are used to determine the rate to be charged to the patient. The costs of providing different services and their levels also vary. Costs assignable to a patient consist of materials, labor, and overhead. The types of materialsused—and the quantity—are identified by the assistant and entered into the computer by the bookkeeper. Material prices are kept on file and accessed to provide the necessary cost informa-tion. Overhead is applied on the basis of patient hours. The rate used by Mesa Dental is $32 per patient hour. Direct labor cost is also computed using patient hours and the wage rates of the direct laborers. Dr. Hemmings is paid an average of $60 per hour for her services. Dental assistants are paid an average of $20 per hour. Given the treatment time, the software program cal-culates and assigns the labor cost for the dentist and her assistant; overhead cost is also assigned using the treatment time and the overhead rate. The overhead rate does not include a charge for any X-rays. The X-Ray Department is sepa- rate from dental services; X-rays are billed and costed separately. The cost of an X-ray is $12 per film; the patient is charged $15 per film. If cleaning services are required, cleaning labor costs $35 per patient hour. Glen Johnson, a patient (Job 267), spent 30 minutes in the treatment area and had a two- surface filling. He received two Novocaine shots and used three ampules of amalgam. The cost of the shots was $14 ($7 each). The cost of the amalgam was $6 per ampule. Other direct materials used are insignificant in amount and are included in the overhead rate. The rate charged to the patient for a two-surface filling is $110. One X-ray was taken.Required: 1. Prepare a job-order cost sheet for Glen Johnson. What is the cost for providing a two- surface filling? What is the gross profit earned? Is the X-ray a direct cost of the service? Why are the X-rays costed separately from the overhead cost assignment?2. Suppose that the patient time and associated patient charges are given for the following fillings: 1-Surface 2-Surface 3-Surface 4-SurfaceTime 20 minutes 30 minutes 40 minutes 50 minutesCharge $90 $110 $150 $175Compute the cost for each filling and the gross profit for each type of filling. Assume that the cost of Novocaine is $14 for all fillings. Ampules of amalgam start at two and increase by one for each additional surface. Assume also that only one X-ray film is needed for all four cases. Does the increase in billing rate appear to be fair to the patient? Is it fair to thedental corporation?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Dr. Alyx Hemmings is employed by Mesa Dental. Mesa Dental recently installed a computerized job-order costing system to help monitor the cost of its services. Each patient is assigned a job number when he or she checks in with the receptionist. The receptionist-bookkeeper notes the time the patient enters the treatment area and when the patient leaves the area. This differ-
ence between the entry and exit times is the number of patient hours used and the direct labor time assigned to the dental assistant. (A dental assistant is constantly with the patient.) The
direct labor time assigned to the dentist is 50 percent of the patient hours. (The dentist typically splits her time between two patients.) The chart filled out by the dental assistant provides additional data that is entered into the computer. For example, the chart contains service codes that identify the nature of the treat-
ment, such as whether the patient received a crown, a filling, or a root canal. The chart not only identifies the type of service but its level as well. For example, if a patient receives a filling, the
dental assistant indicates (by a service-level code) whether the filling was one, two, three, or four surfaces. The service and service-level codes are used to determine the rate to be charged to the patient. The costs of providing different services and their levels also vary. Costs assignable to a patient consist of materials, labor, and
used—and the quantity—are identified by the assistant and entered into the computer by the bookkeeper. Material prices are kept on file and accessed to provide the necessary cost informa-
tion. Overhead is applied on the basis of patient hours. The rate used by Mesa Dental is $32 per patient hour. Direct labor cost is also computed using patient hours and the wage rates of the direct laborers. Dr. Hemmings is paid an average of $60 per hour for her services. Dental assistants are paid an average of $20 per hour. Given the treatment time, the software program cal-
culates and assigns the labor cost for the dentist and her assistant; overhead cost is also assigned using the treatment time and the overhead rate.
The overhead rate does not include a charge for any X-rays. The X-Ray Department is sepa- rate from dental services; X-rays are billed and costed separately. The cost of an X-ray is $12 per film; the patient is charged $15 per film. If cleaning services are required, cleaning labor costs $35 per patient hour.
Glen Johnson, a patient (Job 267), spent 30 minutes in the treatment area and had a two- surface filling. He received two Novocaine shots and used three ampules of amalgam. The cost of the shots was $14 ($7 each). The cost of the amalgam was $6 per ampule. Other direct materials used are insignificant in amount and are included in the overhead rate. The rate charged to the patient for a two-surface filling is $110. One X-ray was taken.
Required:
1. Prepare a
2. Suppose that the patient time and associated patient charges are given for the following fillings:
1-Surface 2-Surface 3-Surface 4-Surface
Time 20 minutes 30 minutes 40 minutes 50 minutes
Charge $90 $110 $150 $175
Compute the cost for each filling and the gross profit for each type of filling. Assume that the cost of Novocaine is $14 for all fillings. Ampules of amalgam start at two and increase by one for each additional surface. Assume also that only one X-ray film is needed for all four cases. Does the increase in billing rate appear to be fair to the patient? Is it fair to the
dental corporation?
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