Question

Raab surgent Clinic provided the following information from its accounting records for 2014: Expected labour operations 32,000 labor hours Expected overhead $9,760,000 Labor hour cost $400 a. A Patient who was admitted in June costed $ 2,000 direct material and needed 12 operation hours. Calculate the total cost of that patient if Raab use labor hours as activity base to determine the manufacturing overhead. b. Calculate the total cost of that patient if Raab use labour cost as activity base to determine the manufacturing overhead.

Answer 1

a)	Expected Overhead			$ 9,760,000.00
	Expected labour operations			32000
	OH rate			$            305.00
	Total Cost Computation
	Direct Material			$         2,000.00
	Direct Labor ( $ 400 x 12 hours)			$         4,800.00
	OH ( $ 305 x 12 hours)			$         3,660.00
		Total Cost		$      10,460.00

b)	Expected Overhead			$   9,760,000.00
	Total Labor cost(32000 x $ 400)			$ 12,800,000.00
	OH per labor hour cost			$                   0.76
	Total Cost Computation
	Direct Material			$           2,000.00
	Direct Labor ( $ 400 x 12 hours)			$           4,800.00
	OH ($ 4800 x 0.76)			$           3,660.00
				$         10,460.00