St. Joseph\'s Hospital uses a job-order costing system for all patients who have

Question

St. Joseph's Hospital uses a job-order costing system for all patients who have surgery. The following information is available:

Budgeted indirect costs-pre-operating room:     $84,000

Budgeted indirect costs- operating room:           $66,000

Budgeted indirect costs- surgery recover floor:  $600,000

Budgeted nursing hours- pre-operating room:     4,000

Budgeted nursing hours-operating room:              1,000

Budgeted nursing hours-surgery recovery floor      7,500

The cost driver for all indirect costs is nursing hours. The hospital uses a budgeted rate for indirect costs. A patient spent 8 hours in the pre-operating room, 4 hours in the operating room and 96 hours the surgery recover floor. What amount of indirect costs will be applied to this patient?

A. $336.00

B. $7,680

C. $8,112

D $600.00

Explanation / Answer

C. $8,112

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