Predetermined Factory Overhead Rate Peehiling Medical Center has a single operat

Question

Predetermined Factory Overhead Rate Peehiling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operatirng each patient procedure and Indludes the direct materials costs (drugs and medical devices), physician surgical time, and operating roorm current year, the annual operating room overhead is estimated to be Poehling Disposable supplies Depreclation expense Utilities Nurse salaries Technician wages $187,900 33,900 19,700 282,100 92,400 616,000 Total operating room overhead The overhead costs will be assigned to procedures of surgical room eight hours per day, seven days per week. In addition, the operating room will be a. Calculate the estimated number of operating room hours for the year based on the number of surgical room hours. Poehiling Medical Center expects to use the operating room an average of shut down two weeks per year for general repairs. b. Determine the predetermined operating room overheed rate for the year e Bl Harris had a 8-hour procedure on January 22. How much operating d. During January, the operating room was used 186 hours per hour room overhead would be charged to her procedure, using the rate determined in part (b) The actual overhead costs incurred for January were $40,000. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number

Explanation / Answer

a. Estimated Number of Operating Room hours for the year = Total Work Weeks * No. of Hours a day * 7 days

Estimated Number of Operating Room hours for the year = 50 * 8 * 7 = 2800 Operating Room Hours

b. Predetermined Operating room OH rate for year

Predetermined Operating room OH rate for year = TOtal OH Costs / Total Operating room hours = $616000 / 2800

Predetermined Operating room OH rate for year = $220 per Hour

c. Operating room OH charged for 8 hour procedure = 8 * $220 = $1760

d. Operating room OH = $220 * 186 = $40920 . Amount excess applied = $40920 - $40000

$920 (Over Applied)

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