Great Heart Clinic is a medical service institute that provides various services for its patients. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount. Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount. Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount. Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount.
Expert Answer:
Answer rating: 100% (QA)
1 A job costing system would be more appropriate Since Great Heart Clinic provides various services for its patients each of which may have different ... View the full answer
Related Book For
Business Law Text and Exercises
ISBN: 978-1305509603
8th edition
Authors: Roger LeRoy Miller, William E. Hollowell
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
summarize this article TITLE Overhead cost pools. By: Lambert III, S.J., Chen, Kung H., Internal Auditor, 00205745, Oct96, Vol. 53, Issue 5 DATA BASE Business Source Complete Internal auditors who...
-
How much momentum does a car of mass 1 5 0 2 KG have a travels at a consistent speed of 1 4 . 3 m / s?
-
Use examples to hypothesize whether the product of an odd function and an even function is even or odd. Then prove your hypothesis.
-
Using the data in Critical Thinking Question 6, calculate a. The expected overall payoff of each bank. b. The standard deviation of the overall payoff of each bank.
-
What are the differences between average hourly earnings and the employment cost index?
-
Fallon Company, a toy manufacturer that also operates several retail outlets, is preparing its December 31, 2007 financial statements. It has identified the following legal situations that may...
-
1 What is HRM 2 What is Training and Developmnt 3 What is Recruitment 4 What is Selection 5 What is HRP 6 What is Job Analysis 7 What is a Career Planning and Development 8 What is Job-Description 9...
-
Figure 4-34 shows an EER diagram for a restaurant, its tables, and the waiters and waiting staff managers who work at the restaurant. Your assignment is to: a. Develop a relational schema. b. Show...
-
Mischa Furniture Stores (MFS) is a company that specializes in office furniture based in Windhoek. Due to the effects of Covid-19, it has become very imperative for the company to manage its cash...
-
What role do social policies and welfare systems play in addressing intergenerational poverty and promoting social mobility across different socio-economic strata?
-
3. A carnival ride initially rotates at 2.0 rad/s, but comes to rest with a constant acceleration over an angular displacement of 6.0 rad. What is the magnitude of the angular acceleration?
-
Identify 2 things you learned in this class you found to be the most valuable, and answer: (1) What are they? (tell us what they are and remind us what they are all about - this will be a good...
-
Markowitz portfolio optimization: Harry Markowitz received the 1990 Nobel Prize for his path-breaking work in portfolio optimization. One version of the Markowitz model is based on minimizing the...
-
1. An object is undergoing SHM with an amplitude 0.320 m. It goes through 20 cycles of oscillation in 18 seconds. At t = 0 the object is at x = 0.320 m and is instantaneously at rest. Calculate the...
-
For the circuit shown in the following figure, if L= 14 H, Vo=16 V, and R= 29 Q, answer the following 2 questions: i(1) R ell
-
For the given transfer function: Vo(s) / Vi(s) = (s^2C^2R^2 + 1) / (s^2C^2R^2 + 4sCR + 1) Assumiing that 1/(CR) = 120 PI so write the matlab code to find the magnitude plot
-
Government entities spend time and money to find and destroy the labs in which methamphetamine (meth) is made, imprison meth dealers and users, treat addicts, and provide services for affected...
-
Theft Guard Corporation began marketing software in 2005 under the mark Theft Guard. In 2014, Theftwatch.com, Inc., a different company selling different products, begins to use theftguard as part of...
-
Under a Massachusetts statute, large wineries could sell their products through wholesalers or to consumers directly, but not both. Small wineries could use both methods. Family Winemakers of...
-
In the FRED database, find a variable that is available in both a seasonally adjusted form and a not seasonally adjusted form. Plot both over time and describe how large the seasonal variation in the...
-
An economic variable is persistent if declines in the variable tend to be followed by more declines, and increases by more increases. This question asks you to study the persistence of the civilian...
-
It has been argued that the stock market predicts recessions. Using quarterly data since 1961, plot the real value of the stock market index (the Wilshire 5000 index in the last month of the quarter...
Study smarter with the SolutionInn App