Question

Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR's management wants to compute the costs of performing tests for two different types of patients: those who are hospitalized (including those in emergency rooms) and those who are not hospitalized but are referred by physicians. The data for June for the two categories of patients follow Hospital Other Patients Patients Total 832 140 1,470 390 Units (1.e., procedures) produced Equipment-hours used Direct labor-hours Direct labor costs Overhead costs 162 $36,880 $9,682 $46.489 $49.790 The accountant first assigns overhead costs to two pools: overhead related to equipment-hours and overhead related to labor-hours. The analysis of overhead accounts by the cost accountant follows. Account Utilities Supplies Indirect labor and supervision Equipment depreciation and maintenance Miscellaneous Amount $ 4,770 12.580 19,660 9,410 Related to: Equipment- hours Labor-hours Labor-hours Equipment- hours Equipment- hours 3,370 Required: a. Compute the predetermined overhead rates assuming that Owl-Eye Radiologists uses equipment-hours to allocate equipment-related overhead costs and labor-hours to allocate labor-related overhead costs b. Compute the total costs of production and the cost per unit for each of the two types of patients undergoing tests in June. Complete this question by entering your answers in the tabs below. A de Compute the predetermined overhead rates assuming that Owl-Eye Radiologists related overhead costs and labor hours to locate laborated overhead as equipment-hours to allocate equipment Bout. Labo Overhead Rate per hour hour r Required >

Answer 1

a) Overhead rate

equipment related = 17550/390 = 45 per hour

Labor related = 32240/620 = 52 per hour

b) Unit cost

	Hospital patient	Other patient
Direct labor	36800	9600
Overhead related to equipment hour	11250	6300
Overhead related to direct labor	23920	8320
Total Cost	71970	24220
Unit	640	830
Unit cost	112.45	29.18