Question

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:
DATA
Disposable supplies		$382,300
Depreciation expense		95,700
Utilities		40,800
Nurse salaries		355,300
Technician wages		161,900
Total operating room overhead		$1,036,000
The overhead costs will be assigned to procedures, based on the number of surgical room hours. The number of hours per day and days per week that Poehling Medical Center expects to use the operating room and the number of weeks per year for general repairs are provided below:
DATA
Hours per day		8
Days per week		7
Weeks per year (net of maintenance weeks)		50

1. Open spreadsheet

   1. Determine the predetermined operating room overhead rate for the year. Round your answer to the nearest dollar.

      $ per hour

   2. Bill Harris had a four-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)? Round your answer to the nearest dollar.

      $

   3. During January, the operating room was used 230 hours. The actual overhead costs incurred for January were $82,200. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. Round your answer to the nearest dollar.

      $    overapplied

Answer 1

Answer a Calculation of predetermined operating room overhead rate for the year Predetermined Operating room overhead rate per hour = Estimated Annual Overhead / Estimated Total Surgical hours = $1,036,000/ (8 hrs x 7 days x 50 weeks) = $1,036,000 / 2,800 hours = $370 per hour b Calculation of operating room overhead would be charged to his procedure, using the rate determined in part (a) Operating Room Overhead = 4 hours x $370 per hour = $1,480 Calculation of overapplied operating overhead or underapplied operating overhead for the period Actual Overhead $82,200 Applied Overhead (230 hours x $370 per hour) $85,100 Overapplied Overhead $2,900