The Bellevue Clinic computes a cost of treating each patient. It allocates costs to departments and then
Question:
The Bellevue Clinic computes a cost of treating each patient. It allocates costs to departments and then applies departmental overhead costs to individual patients using a different budgeted overhead rate in each department. Consider the following predicted 20X0 data for two of Bellevue’s departments:
The cost-allocation base for overhead in the pharmacy is number of prescriptions filled; in medical records it is number of patient visits.
In June 20X0, David Li paid two visits to the clinic and had four prescriptions filled at the pharmacy.
1. Compute departmental overhead rates for the two departments.
2. Compute the overhead costs applied to the patient David Li in June 20X0.
3. At the end of 20X0, actual overhead costs were as follows:
The pharmacy filled 85,000 prescriptions and the clinic had 63,000 patient visits during 20X0. Compute the overapplied or underapplied overhead in each department.
Step by Step Answer:
Introduction To Management Accounting
ISBN: 9780273737551
1st Edition
Authors: Alnoor Bhimani, Charles T. Horngren, Gary L. Sundem, William O. Stratton, Jeff Schatzberg