Predetermined Factory Overhead Rate Barley Medical Center has a single operating

Question

Predetermined Factory Overhead Rate

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:

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.
$ per hour

b. Gretchen Kelton had a 8-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 194 hours. The actual overhead costs incurred for January were $36,000. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number.
$

Disposable supplies $162,300 Depreciation expense 29,300 Utilities 17,000 Nurse salaries 243,700 Technician wages 79,700 Total operating room overhead $532,000

Explanation / Answer

Particulars Amount $ Disposable Supplies      162,300 Depreciation        29,300 Utilities        17,000 Nurse Salaries      243,700 Technician Wages        79,700 Total      532,000 Hrs per Year 365*7*8 Total Hrs        20,440 A) Rate Per Hr    = 532000/20440 OH Rate per Hr               26 Total Hrs in Jan : Hrs In Jan 31*7*8 Total Hrs in Jan          1,736 Overhead Charged @26/Hr as Arrived Above        45,136 C) Usage of Hrs in Jan 194 Applied Overhead        36,000 Standard Overhead 26*194          5,044 Over Applied OH in Jan        30,956

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