San Jose Medical Center has a single operating room that is used by local physicians to perform
Question:
San Jose 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 August 1 of the current year, the annual operating room overhead is estimated to be:
Disposable supplies ....... $116,700
Depreciation expense ...... 18,000
Utilities ............ 11,200
Nurse salaries ......... 164,000
Technician wages ........ 57,600
Total operating room overhead . $367,500
The overhead costs will be assigned to procedures based on the number of surgical room hours. The Medical Center expects to use the operating room an average of seven hours per day, six 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.
b. Allison Mann had a 5-hour procedure on August 10. How much operating room overhead would be charged to her procedure, using the rate determined in part (a)?
c. During August, the operating room was used 182 hours. The actual overhead costs incurred for August were $30,700. Determine the overhead under- or over-applied for the period.
Step by Step Answer:
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac