Greenfield Hospital uses a job-order costing system for all patients who undergo surgery. The following budgeted indirect cost data is available: Pre-Operative Room Costs: $92,000 Operating Room Costs: $72,500 Surgical Recovery Costs: $38,000 If the hospital applies overhead based on direct labor hours and estimates 15,200 direct labor hours for the year, what is the predetermined overhead rate per direct labor hour?

Greenfield Hospital uses a job-order costing system for all patients who undergo surgery. The following budgeted indirect cost data is available: Pre-Operative Room Costs: $92,000 Operating Room Costs: $72,500 Surgical Recovery Costs: $38,000 If the hospital applies overhead based on direct labor hours and estimates 15,200 direct labor hours for the year, what is the predetermined overhead rate per direct labor hour?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 2CE: Lising Therapy has a physical therapist who performs electro-mechanical treatments for its patients....

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Lising Therapy has a physical therapist who performs electro-mechanical treatments for its patients. During April, Lising had the following cost and output information: Required: 1. Calculate the cost per treatment for April. 2. Calculate the cost of services sold for April. 3. What if Lising found a way to reduce overhead costs by 20 percent? How would this affect the profit per treatment?
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ictoria Hospital uses a job cost system for all patients who have surgery. In March, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 4 000 nursing hours and 2 000 nursing hours respectively. The budgeted nursing overhead charges forEACH department for the month were $168 000 and $132 000 respectively. The hospital floorfor patients who had undergone surgery, had budgeted overhead costs of $1 200 000 and 15 000nursing hours for the month. For patient Fred Adams, actual hours incurred were eight in thepre-operating room and four in the operating room. He was in the hospital for 4 days (96 hours).Other costs related to Adams were: PRE-OP Costs OR Costs In-room CostsPatient medicine $ 200 $ 500 $2 400Direct nursing time $1 000 $2 000 $3 000 The hospital uses a budgeted overhead rate for applying overheads to patient stays.Required:i. Identify THREE industries suited to using service costing in cost ascertainment.ii. Identify the applicable overhead…
Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient’s bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Budget Direct labor hours 10,000 Overhead costs: Indirect material $3,500 Indirect labor $45,000 Utilities $6,000 Insurance $78,000 Property taxes $30,000 Total $162,500 During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctors Hours Charged Doctor A 2,000 Doctor B 1,850 Doctor C 1,960 Doctor D 2,100 Doctor E 2,500 Doctor F 1,780 Total 12,190 The overhead variance is deemed…
Financial Accounting
Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $230 per day Radiology $185 per image Pharmacy $50 per physician order Chemistry lab $90 per test Operating room $1,030 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 6 days 3 days Number of images 5 images 3 images Number of physician orders 7 orders 2 orders Number of tests 6 tests 2 tests Number of operating room hours 9 hours 5 hours This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine the activity cost associated with each patient.…
Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its “products.” The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: Activity Budgeted Activity Cost Activity Base Scheduling and admitting $432,000 Number of patients Housekeeping 4,212,000 Number of patient days Nursing 5,376,000 Weighted care unit Total costs $10,020,000 Total “patient days” are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a…
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A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…