Reference no: EM131760053
Barley 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 |
$256,200 |
| Depreciation expense |
46,200 |
| Utilities |
26,900 |
| Nurse salaries |
384,700 |
| Technician wages |
126,000 |
| |
Total operating room overhead |
$840,000 |
The overhead costs will be assigned to procedures based on the number of surgical room hours. Barley 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.
b. Gretchen Kelton had a 4-hour procedure on January 15. How much operating room overhead would be charged to her procedure, using the rate determined in part (a)?
c. During January, the operating room was used 186 hours. The actual overhead costs incurred for January were $54,600. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number.