The Jasper Avenue Clinic computes costs 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 2011 data for two of the clinic’s departments:

The cost driver for overhead in Pharmacy is number of prescriptions filled; in Medical Records it is number of patient visits. In June 2011, 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 2011.

3. At the end of 2011, actual overhead costs were:

Pharmacy.....................................$217,000
Medical records ..........................$325,000

The pharmacy filled 85,000 prescriptions, and the clinic had 63,000 patient visits during 2011. Compute the over applied or under applied overhead in each department.

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Pharmacy Medical Records Department overhead cost Number of prescriptions filled Number of patient visits $225,000 $300,000 90,000 60,000