Hi,
I could use some help with the questions below.
Poehling 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:
| Disposable supplies | $289,300 | |
| Depreciation expense | 72,400 | |
| Utilities | 30,900 | |
| Nurse salaries | 268,900 | |
| Technician wages | 122,500 | |
| Total operating room overhead | $784,000 |
The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling 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.
| The overhead costs will be assigned to procedures, based on the number of surgical room hours. The number of hours per day and days per week that Poehling Medical Center expects to use the operating room and the number of weeks per year for general repairs are provided below: | ||||
| DATA | ||||
| Hours per day | 8 | |||
| Days per week | 7 | |||
| Weeks per year (net of maintenance weeks) | 50 | |||
| Select the correct answer in the dropdown in cell B30. Using formulas and cell references, perform the required analysis, and input your answers into the Amount column. Transfer the numeric results for the green entry cells (D23, D26, and D30) into the appropriate fields in CNOWv2 for grading. | ||||
| Amount | Formulas | |||
| a. | Predetermined surgical overhead rate (per hour) | |||
| b. | Number of surgical room hours | 6 | ||
| Procedure overhead | ||||
| c. | Actual hours used in January | 210 | ||
| Actual surgical room overhead incurred, January | $56,800 | |||
| surgical room overhead | ||||
Determine the predetermined operating room overhead rate for the year. Round your answer to the nearest dollar.
$fill in the blank per hour
Bill Harris had a six-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)? Round your answer to the nearest dollar.
$fill in the blank
During January, the operating room was used 210 hours. The actual overhead costs incurred for January were $56,800. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. Round your answer to the nearest dollar.
$fill in the blank 4
overapplied/
underapplied
To determine the predetermined operating room overhead rate for the year, we’ll use the information provided. The annual operating room overhead cost is $784,000, and Poehling Medical Center expects to use the operating room for an average of eight hours per day, seven days per week, for 50 weeks per year (net of maintenance weeks).
Let’s calculate the predetermined surgical overhead rate (per hour) using the following formula:
Predetermined Surgical Overhead Rate = Annual Overhead Cost / (Hours per day * Days per week * Weeks per year)
Predetermined Surgical Overhead Rate = $784,000 / (8 hours/day * 7 days/week * 50 weeks/year)
Predetermined Surgical Overhead Rate ≈ $112 per hour
So, the predetermined surgical overhead rate for the year is approximately $112 per hour.
Now, let’s calculate the amount of operating room overhead that would be charged to Bill Harris’s six-hour procedure on January 22 using the rate determined in part (a):
Operating Room Overhead for Bill Harris’s Procedure = Predetermined Surgical Overhead Rate * Number of Hours
Operating Room Overhead for Bill Harris’s Procedure = $112/hour * 6 hours
Operating Room Overhead for Bill Harris’s Procedure = $672
So, the operating room overhead charged to Bill Harris’s procedure is $672.
Lastly, let’s determine whether there was overapplied or underapplied operating overhead for the month of January. To do this, we’ll compare the actual overhead costs incurred to the overhead assigned based on the predetermined rate.
Actual Surgical Room Overhead Incurred in January = $56,800 (as given)
Overhead Assigned Based on Predetermined Rate = Predetermined Surgical Overhead Rate * Actual Hours Used in January
Overhead Assigned Based on Predetermined Rate = $112/hour * 210 hours
Overhead Assigned Based on Predetermined Rate = $23,520
Now, calculate the overapplied or underapplied operating overhead:
Overapplied/Underapplied Operating Overhead = Actual Overhead Costs Incurred – Overhead Assigned Based on Predetermined Rate
Overapplied/Underapplied Operating Overhead = $56,800 – $23,520
Overapplied/Underapplied Operating Overhead = $33,280
Since the actual overhead costs incurred were greater than the overhead assigned based on the predetermined rate, there was an overapplied operating overhead of $33,280 for the month of January.
In summary:
– The predetermined surgical overhead rate for the year is approximately $112 per hour.
– The operating room overhead charged to Bill Harris’s procedure is $672.
– There was an overapplied operating overhead of $33,280 for the month of January.
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