Reference no: EM132479047

Problem 1: 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$213,500

Depreciation expense38,500

Utilities22,400

Nurse salaries320,600

Technician wages105,000

Total operating room overhead$700,000

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.

Problem a. Determine the predetermined operating room overhead rate for the year.

Problem 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)?

Problem c. During January, the operating room was used 186 hours. The actual overhead costs incurred for January were $45,500. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number.

Problem 2: Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,400 of indirect materials and $12,000 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301Job 302

Direct materials $9,000;

Direct materials $21,100;

Direct labor 7,700;

Direct labor 16,800;

Factory overhead 5,467;

Factory overhead 11,928;

Total $22,167

Total$49,828

Job 303

Job 304

Direct materials$25,200

Direct materials$14,800

Direct labor16,100

Direct labor13,900

Required:

Problem a: Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.a. Direct and indirect materials used.b. Direct and indirect labor used.c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).d. Completion of Jobs 301 and 302.

CHART OF ACCOUNTSOld School Publishing Inc.General Ledger

ASSETS110

Cash121

Accounts Receivable125

Notes Receivable126

Interest Receivable131

Materials132

Work in Process133

Factory Overhead134

Finished Goods141

Supplies142

Prepaid Insurance143

Prepaid Expenses181

Land191

Factory192

Accumulated Depreciation-Factory

LIABILITIES210

Accounts Payable221

Utilities Payable231

Notes Payable236

Interest Payable241

Lease Payable251

Wages Payable252

Consultant Fees Payable

EQUITY311

Common Stock340

Retained Earnings351

Dividends390

Income Summary

REVENUE410

Sales610

Interest Revenue

Problem b: Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.a. Direct and indirect materials used.b. Direct and indirect labor used.c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).d. Completion of Jobs 301 and 302.