Question

Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies $196,400 Depreciation expense 35,400 Utilities 20,600 Nurse salaries 295,000 Technician wages 96,600 Total operating room overhead $644,000 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Determine the predetermined operating room overhead rate for the year. per hour b. Bill Harris had a 4-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)? C. During January, the operating room was used 194 hours. The actual overhead costs incurred for January were $43,600. Determine the overapplied operating overhead or underapplied operating overhead for the period. Previous Next > Email Instructor Submit Test for Grading All work saved.

Answer 1

Predetermined Overhead rate = Estimated overhead/Estimated surgical room hours Surgical room hours = 8*7*(52-2)weeks = 2800 hours = 644,000/2800 = 230

Overhead charged = 230 * 4 = 920

Applied overhead = 230*194 = 44,620 Actual overhead = 43,600 So, 1020 over-applied