Medical Arts Hospital (MAH) uses a hospital-wide overhead rate based on nurse-hours. The intensive care unit (ICU), which has 30 beds, applies overhead using patient-days. Its budgeted cost and operating data for the year follow:

In June, MAH’s intensive care unit had the following operating data:
81,000 nurse-hours
7,250 patient-days
Required
1. Calculate the ICU’s overhead costs for the month of June using
a. The hospitalwide rate
b. The ICU departmentwide rate
c. The cost driver rates for the ICU department
2. Explain the differences and determine which overhead assignment method is moreappropriate.

Transcribed Image Text:

Hospital Budget Information Hospital total overhead Hospital total nurse-hours $57,600,000 1,152,000 Budget Cost Driver Information for ICU for the Month of June Cost Pool Facilities and equipment Nursing care Budget Cost $2,400,000 3,000,000 Cost Driver Number of patient-days Number of n Budget Cost Driver Activity 7,500 80,000 urse-hours