McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
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McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials include a variety of items suc as pharmaceutical drugs, heart valves, artificial hips, and pacemakers. Its direct labor costs (e.g., surgeons, anesthesiologists, radiologists, and nurses) associated with specific surgical procedures and tests are traced to individual patients. All other costs, suc as depreciation of medical equipment, insurance, utilities, incidental medical supplies, and the labor costs associated with around-th clock monitoring of patients are treated as overhead costs. Historically, McCullough has used one predetermined overhead rate based on the number of patient-days (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. Recently a member of the hospital's accounting staff has suggested using two predetermined overhead rates (allocated based on the number of patient-days) to improv the accuracy of the costs allocated to patients. The first overhead rate would include all overhead costs within the Intensive Care Ur (ICU) and the second overhead rate would include all Other overhead costs. Information pertaining to the hospital's estimated numb of patient-days, its estimated overhead costs, and two of its patients-Patient A and Patient B-is provided below: Estimated number of patient-days Estimated fixed overhead cost Estimated variable overhead cost per patient-day ICU 3,100 $5,359,900 Other 24,800 $21,700,000 Total 27,900 $27,059,900 $ 320 $ 121 Patient A Patient B Direct materials $ 5,600 $ 7,300 Direct labor $ 27,750 $ 38,200 Total number of patient-days (including ICU) 20 25 Number of patient-days spent in ICU 0 13 Required: 1. Assuming McCullough uses only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. 2. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: a. The ICU and Other overhead rates. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest whole dollar amount.) 1a. Predetermined overhead rate 1b. Total cost for patient A Total cost for patient B per patient-day 2a. Predetermined ICU overhead rate per patient-day Predetermined Other overhead rate per patient-day 2b. Total cost for patient A Total cost for patient B McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials include a variety of items suc as pharmaceutical drugs, heart valves, artificial hips, and pacemakers. Its direct labor costs (e.g., surgeons, anesthesiologists, radiologists, and nurses) associated with specific surgical procedures and tests are traced to individual patients. All other costs, suc as depreciation of medical equipment, insurance, utilities, incidental medical supplies, and the labor costs associated with around-th clock monitoring of patients are treated as overhead costs. Historically, McCullough has used one predetermined overhead rate based on the number of patient-days (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. Recently a member of the hospital's accounting staff has suggested using two predetermined overhead rates (allocated based on the number of patient-days) to improv the accuracy of the costs allocated to patients. The first overhead rate would include all overhead costs within the Intensive Care Ur (ICU) and the second overhead rate would include all Other overhead costs. Information pertaining to the hospital's estimated numb of patient-days, its estimated overhead costs, and two of its patients-Patient A and Patient B-is provided below: Estimated number of patient-days Estimated fixed overhead cost Estimated variable overhead cost per patient-day ICU 3,100 $5,359,900 Other 24,800 $21,700,000 Total 27,900 $27,059,900 $ 320 $ 121 Patient A Patient B Direct materials $ 5,600 $ 7,300 Direct labor $ 27,750 $ 38,200 Total number of patient-days (including ICU) 20 25 Number of patient-days spent in ICU 0 13 Required: 1. Assuming McCullough uses only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. 2. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: a. The ICU and Other overhead rates. b. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest whole dollar amount.) 1a. Predetermined overhead rate 1b. Total cost for patient A Total cost for patient B per patient-day 2a. Predetermined ICU overhead rate per patient-day Predetermined Other overhead rate per patient-day 2b. Total cost for patient A Total cost for patient B
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Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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