Mercy Hospital uses a costing system to determine the cost of patients who have surgery. The hospital uses a budgeted indirect cost rate for allocating indirect costs to patient stays. In March, the operating room had a budgeted allocation base of 1000 operating hours. The budgeted operating room indirect costs were $66 000.
Patient Dwight Schuller was in the operating room for four hours during March. Other costs related to Schuller's four-hour surgery include:
Patient medicine ...............................$250
Cost of nurses..................................3500
Cost of supplies ................................ 800
Physician cost is not included because physicians bill patients separately from the hospital billing system.
Required:
a. Calculate the budgeted (estimated) indirect cost rate for the operating room.
b. Calculate the total costs of Schuller's four-hour surgery.