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 Patients |
Other Patients |
Total |
|||||||
Units (i.e., procedures) produced |
680 |
880 |
1,560 |
||||||
Equipment-hours used |
230 |
110 |
340 |
||||||
Direct labor-hours |
500 |
150 |
650 |
||||||
Direct labor costs |
$ |
40,000 |
$ |
9,000 |
$ |
49,000 |
|||
Overhead costs |
$ |
46,500 |
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 |
Amount |
Related to: |
||
Utilities |
$ |
4,790 |
Equipment-hours |
|
Supplies |
12,690 |
Labor-hours |
||
Indirect labor and supervision |
18,510 |
Labor-hours |
||
Equipment depreciation and maintenance |
7,060 |
Equipment-hours |
||
Miscellaneous |
3,450 |
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. (Round "Cost per unit" to 2 decimal places.)
|
a.
Equipment related overheads = Utilities + Equipment depreciation and maintenance + Miscellaneous
= 4,790 + 7,060 + 3,450
= $15,300
Equipment-hours used = 340
Equipment related overhead rate = Equipment related overheads/Equipment-hours used
= 15,300/340
= $45
Labor related overheads = Supplies + Indirect labor and supervision
= 12,690 + 18,510
= 31,200
Direct labor-hours = 650
Labor related overhead rate = Labor related overheads/Direct labor-hours
= 31,200/650
= $48
Overhead rate per hour | |
Equipment related | $45 |
Labor related | $48 |
b.
Total cost of hospital patients = Direct labor cost + Equipment related overheads + Labor related overheads
= 40,000 + (45 x 230) + (48 x 500)
= 40,000 + 10,350 + 24,000
= $74,350
Cost per unit = Total cost/Number of units produced
= 74,350/680
= $109.34
Total cost of other patients = Direct labor cost + Equipment related overheads + Labor related overheads
= 9,000 + (45 x 110) + (48 x 150)
= 9,000 + 4,950 + 7,200
= $21,150
Cost per unit = Total cost/Number of units produced
= 21,150/880
= $24.03
Hospital patients | Other patients | |
Total cost | $74,350 | $21,150 |
Cost per unit | $109.34 | $24.03 |
Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR's...
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 Patients Other Patients Total Units (i.e., procedures) produced 680 830 1,510 Equipment-hours used 240 110 350 Direct...
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 Patients Other Patients Total Units (i.e., procedures) produced 670 800 1,470 Equipment-hours used 250 150 400 Direct...
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 Patients Other Patients Total Units (i.e., procedures) produced 680 850 1,530 Equipment-hours used 220 130 350 Direct...
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 Patients Other Patients Total Units (i.e., procedures) produced 680 870 1,550 Equipment-hours used 240 110 350 Direct...
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...
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...
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 Patients Other Patients 800 660 110 Units (i.e., procedures) produced Equipment-hours used Direct labor-hours Direct labor costs...
Problem 6-56 (Static) Two-Stage Allocation and Product Costing (LO 6-5) 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 Patients Other Patients Total Units (i.e., procedures)...
Donovan & Parents produces soccer shorts and jerseys for youth leagues. Most of the production is done by machine. Data on operations and costs for March follow. Units produced Machine-hours used Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead costs Jerseys Shorts Total 32,00 16,00 48.00 6.eee 4.8ee 1 e.see 1.2ee7281.92e $96. eee $64, see $160.ece $32,300 $19,200 $ 52,eee $266,400 Management asks the firm's cost accountant to compute product costs. The accountant first assigns overhead costs to...
Donovan & Parents produces soccer shorts and jerseys for youth leagues. Most of the production is done by machine. Data on operations and costs for March follow Units produced Machine-hours used Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead costs Jerseys 10,100 980 230 $12,300 $ 4,600 Shorts 5,600 820 110 $7,100 $2,200 Total 15,700 1,800 340 $19,400 $ 6,800 $21,438 Management asks the firm's cost accountant to compute product costs. The accountant first assigns overhead costs to...