Kate 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 procedure 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 Utilities Nurse salaries $222,000 40,000 23,300 333,400 109,300 $728,000 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. Technician wages Total operating room overhead a. Determine the predetermined operating room overhead rate for the year. per hour b. Bill Harris had a 4-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 194 hours. The actual overhead costs incurred for January were $49,300. Determine the overapplied operating overhead or underapplied operating overhead for the period.
Kate 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 procedure 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 Utilities Nurse salaries $222,000 40,000 23,300 333,400 109,300 $728,000 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. Technician wages Total operating room overhead a. Determine the predetermined operating room overhead rate for the year. per hour b. Bill Harris had a 4-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 194 hours. The actual overhead costs incurred for January were $49,300. Determine the overapplied operating overhead or underapplied operating overhead for the period.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Predetermined Factory Overhead Rate
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 procedure 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
Utilities
Nurse salaries
$222,000
40,000
23,300
333,400
109,300
$728,000
Technician wages
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.
per hour
b. Bill Harris had a 4-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 194 hours. The actual overhead costs incurred for January were
$49,300. Determine the overapplied operating overhead or underapplied operating overhead for the period.
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