Mt Ellis Medical Center has a single operating room that is used by local physic
ID: 2545798 • Letter: M
Question
Mt Ellis 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 March 1 of the current year, the annual operating room overhead is estimated to be Disposable supplies Depreciation expense Utilities Nurse salaries Technician wages $213,500 38,500 22,400 320,600 105,000 Total operating room overhead The overhead costs will be assigned to procedures based on the number of surgical room hours. Mt Ellis 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. Shirlee Greer had a 3-hour procedure on March 18. How much operating room overhead would be charged to her procedure, using the rate determined in part (a)?Explanation / Answer
(a) Predetermined Operating Room Overhead Rate
= Total operating room overhead / Estimated total surgical hrs
= $ 7,00,000 / ( 8 hours x 7 days x 50 weeks )
= $ 7,00,000,/ 2800 hours
Predetermined Operating Room Overhead Rate = $ 250/hour
(b) Operating room overhead would be charged to her procedure, using the rate determined in part (a)
= 3 Hours x $ 250/hour
= $ 750
(c) Actual = $ 47400
Applied = 194 hours x 250/hour =$ 48500
Therefore, Operating room overhead is over applied for an amount of $ 1,100
( $ 48500 - $ 47400 )
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