Reference no: EM132521967
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 cost (drugs and medical device), 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 $299,600
Depreciation expense 75,000
Utilities 32,000
Nurse salaries 278,000
Technician wages 126,900
Total operating room overhead $812,000
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.
Required -
a. Determine the predetermined operating room overhead rate for the year.
b. Bill Harris had a five-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)?
c. During January, the operating room was used 240 hours. The actual overhead costs incurred for January were $67,250. Determine the overhead under- or overapplied for the period.