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. Units (i.e., procedures) produced Equipment-hours used Direct labor-hours Direct labor costs Overhead costs Hospital Patients 690 240 469 $36,800 Other Patients 820 100 180 $10,800 Total 1,510 340 640 $47,600 $47,680 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 Related to: $ 4,890 Equipment-hours 12,570 Labor-hours 18,790 Labor-hours 8,990 Equipment-hours 3,340 Equipment-hours 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. Required A Required B 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. Equipment-related Labor-related Overhead Rate per hour per hour < Required A Required B >

Answer 1

Predetermined Overhead rate = Overhead costs/Total Driver
	Overhead cost	Driver	Rate
Equipment Related	16320	340	48	per hour
Labor Related	31360	640	49	per hour
	Hospital Patients	Other Patients
Direct Labor costs	36,800	10,800
Overhead Allocated
Equipment Related	11,520	4,800
Labor Related	22,540	8,820
Total costs	70,860	24,420
Number of units	690	820
Cost per unit	102.70	29.78