**Novello Medical Center Operating Room Overhead Calculation**Novello Medical Center has a single operating room used by local physicians for surgical procedures. The costs of using the operating room accrue with each patient procedure and include direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead.**Annual Operating Room Overhead Estimates (as of January 1st)**- **Disposable supplies:** $350,100- **Depreciation expense:** $63,100- **Utilities:** $36,700- **Nurse salaries:** $525,800- **Technician wages:** $172,300**Total Operating Room Overhead:** $1,148,000**Overhead Cost Allocation**The overhead costs are assigned to procedures based on surgical room hours. Novello Medical Center plans to use the operating room for an average of eight hours per day, seven days a week. The operating room will be closed for two weeks annually for general repairs.**Tasks**a. **Compute the estimated number of operating room hours for the year.**b. **Determine the predetermined operating room overhead rate for the year.**c. **Calculate Charges for a Procedure:** - Example: Conrad Goldsmith's 7-hour procedure on January 22nd. - Calculate the operating room overhead charges based on the rate from part (b). Novello Medical Center plans to assign overhead costs to procedures based on the number of surgical room hours. The expectation is to use the operating room for an average of eight hours per day, seven days a week. Additionally, the operating room will be closed two weeks per year for general repairs.**a.** Compute the estimated number of operating room hours for the year. \[ \_\_\_\_\_\_\_ \] hours**b.** Determine the predetermined operating room overhead rate for the year. \[ \_\_\_\_\_\_\_ \] per hour**c.** Conrad Goldsmith had a 7-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (b)? \[ \_\_\_\_\_\_\_ \]**d.** During January, the operating room was used for 186 hours. The actual overhead costs incurred for January were $74,600. Determine the overapplied or underapplied operating overhead for the period. \[ \_\_\_\_\_\_\_ \] overapplied/underapplied**Feedback:**- Use estimated annual operating room hours and estimated annual operating room overhead to find the predetermined overhead rate.- Apply the predetermined overhead rate to the hours of actual surgery.- Apply the predetermined overhead rate to the actual hours.- Compare the actual overhead cost and the applied overhead cost.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $196,400 Depreciation expense 35,400 Utilities 20,600 Nurse salaries 295,000 Technician wages 96,600 Total operating room overhead $644,000 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Determine the predetermined operating room overhead rate for the year.$fill…
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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 $358,700 Depreciation expense 64,700 Utilities 37,600 Nurse salaries 538,600 Technician wages 176,400 Total operating room overhead $1,176,000 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. a. Calculate the estimated number of operating room hours for the year. hours b. Determine the…
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