A veterinarian uses activity-based costing to allocate
overhead to patients. Two identified activities include the
operating room expenses and cleaning expenses. Operating room
expenses of $21,112 for the upcoming quarter will be allocated
based on the hours spent in the operating room, which the
veterinarian expects to total 100 hours. Estimated cleaning
expenses of $14,667 for the upcoming quarter will be allocated
based on the number of nights the patient spends in the office. The
veterinarian expects to have patients spend a total of 1,342
nights.
a. Calculate the activity rate for the operating room expenses and
the cleaning expenses.
b. If Nick Walters spends 5 hours in the operating room and 3
nights in the office, how much overhead will be allocated to the
patient?
A) | Activity rate | ||||||
operating room expense | |||||||
= estimated operating room expense/hours spent | |||||||
21,112/100 | |||||||
211.12 | per hr spent | ||||||
Cleaning expense | |||||||
= estimated cleaning expense/number of patient nights | |||||||
14,667/1,342 | |||||||
10.93 | per night | ||||||
B) | overhead allocated | ||||||
operating room expense 211.12*5 | 1056 | ||||||
cleaning expense 10.93*3 | 33 | ||||||
total overhead allocated | 1088 | answer | |||||
A veterinarian uses activity-based costing to allocate overhead to patients. Two identified activities include the operating...
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