Calculate the predetermined overhead rate for the operating room, and determine the charge to Candice.
PROBLEM 2-19. Service Company Use of Predetermined
SouthwestCommunityHospitaluses a job-order costing system to
track charges for each patient. The following charges relate to
Candice O’Dea, who had laparoscopic knee surgery:
Operating room service (nursing staff)
Southwest charges patients for the use of the operating room
based on a predetermined overhead rate. The estimated overhead
costs of the operating room are $5,000,000, and the activity base
is available hours of 2,000.
a. Calculate the predetermined overhead rate for the operating
room, and determine the charge to Candice. Assume that her surgery
took 3 hours in the operating room.
b. Calculate the total cost for the knee surgery.