EP AUDITING+ASSURANCE...-MYACCT.LAB
EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Chapter 11, Problem 13RQ
To determine

Identify the reason behind auditors generally prefer evaluating entity-level controls before evaluating transaction-level controls.

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Northeast Regional Hospital uses a job-order costing system to track patient charges. The following charges relate to Michael Carter, who had an appendectomy: • Pharmacy: $200 • Sterile Supply: $900 • Supplies, Other: $3,800 • Operating Room Service (Nursing Staff): $3,500 . Anesthesia: $1,200 • Anesthesiologist: $2,800 Northeast charges patients for the use of the operating room based on a predetermined overhead rate. The estimated overhead costs for the operating room are $4,800,000, and the activity base is 1,800 available hours. Michael's surgery took 2.5 hours in the operating room. (a) Calculate the predetermined overhead rate for the operating room and determine the charge to Michael. (b) Calculate the total cost for the appendectomy.
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