GWS Hospital uses a hospital-wide overhead rate based on nurse-hours. The intens
ID: 2450979 • Letter: G
Question
GWS Hospital uses a hospital-wide overhead rate based on nurse-hours. The intensive care unit (ICU), which has 30 beds, applies overhead using patient-days. Its budgeted cost and operating data for the year follow: In June, GWS's intensive care unit had the following operating data: 9,350 nurse-hours 1,230 patient-days Required: Calculate the ICU's overhead costs for the month of June using The hospital-wide rate The ICU department-wide rate The cost drivers for the ICU department Explain the differences and determine which overhead assignment method is more appropriate.Explanation / Answer
Solution:
(A). Hospital Overhead Rate Caluculation:
Overhead Rate = $ 36,828,000 / 13,64,000
= 27
(B). ICU Dept - Wide Rate:
Beds: = 8,30,000 / 900
= 922.2
Equipment: = 4,50,600 / 1000
= 450.6
Nursing Care = 3,75,400 / 6000
= 62.5
(C). Cost Drivers for the ICU Dept:
Beds: = 900 * 30 = 27,000
Equipment = 1000 * 30 = 30,000
Nurse Care = 6000 * 30 = 1,80,000
(2). Hospital Overhead Rate is More Useful and Best O.H rate
O.H Rate = Estimated Total Mfg O.H Costs / Estimated Total Activity Base (Total Nurse hours)Related Questions
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