Question: Mr Robbins s detailed medical records indicated that a total of
Mr. Robbins’s detailed medical records indicated that a total of 20 labor hours were directly used in pro-viding his care. The cost of the labor was $ 380. It was expected before the beginning of the year that a total of 90,000 direct labor hours would be consumed by the health care organization’s patients, at a cost of $ 1,350,000. The total overhead to be allocated to patients was expected to be $ 810,000. Determine the overhead to be assigned to Mr. Robbins based on the data given. Solve this problem in two ways: First, assign overhead on the basis of direct labor hours; and second, assign overhead on the basis of direct labor cost. Why might your results differ?
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