Mercy Hospital uses a job costing system for all patients who have surgery. The hospital uses a budgeted overhead rate for allocating overhead to patient stays. In March, the operating room had a budgeted allocation base of 1,000 operating hours. The budgeted operating room overhead costs were $66,000.
Patient Dwight Schuller was in the operating room 4 hours during March. Other costs related to Schuller’s 4-hour surgery include:
Patient medicine .... $ 250
Cost of nurses ..... 3,500
Cost of supplies ..... 800
Physician cost is not included because physicians bill patients separately from the hospital billing system.

A. Explain why the hospital uses a job costing system instead of a process costing system.
B. Determine the budgeted (i.e., estimated) overhead rate for the operating room.
C. Determine the total hospital costs of Schuller’s four-hour surgery.

  • CreatedJanuary 26, 2015
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