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1. Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost

1.

Predetermined Factory Overhead Rate

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 $170,800
Depreciation expense 30,800
Utilities 17,900
Nurse salaries 256,500
Technician wages 84,000
Total operating room overhead $560,000

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.

a. Calculate the estimated number of operating room hours for the year. hours

b. Determine the predetermined operating room overhead rate for the year. $ per hour

c. Bill Harris had a 4-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (b)? $

d. During January, the operating room was used 186 hours. The actual overhead costs incurred for January were $36,400. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. $

2.

Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations:

a. Materials purchased on account, $29,800.
b. Materials requisitioned and factory labor used:

Job

Materials

Factory Labor

301 $ 2,960 $2,775
302 3,620 3,750
303 2,400 1,875
304 8,100 6,860
305 5,100 5,250
306 3,750 3,340
For general factory use 1,080 4,100
c. Factory overhead costs incurred on account, $5,500.
d. Depreciation of machinery and equipment, $1,980.
e. The factory overhead rate is $54 per machine hour. Machine hours used:
Job Machine Hours
301 25
302 36
303 30
304 72
305 40
306 25
Total 228
f. Jobs completed: 301, 302, 303 and 305.
g. Jobs were shipped and customers were billed as follows: Job 301, $8,250; Job 302, $11,200; Job 303, $15,000.
Required:
1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on January 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.*
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.*
*Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.

CHART OF ACCOUNTS
Tybee Industries Inc.
General Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
132 Work in Process
133 Factory Overhead
134 Finished Goods
141 Supplies
142 Prepaid Insurance
143 Prepaid Expenses
181 Land
191 Machinery and Equipment
192 Accumulated Depreciation-Machinery and Equipment
LIABILITIES
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
241 Lease Payable
251 Wages Payable
252 Consultant Fees Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue

Amount Descriptions
Job No. 301
Job No. 302
Job No. 303
Job No. 304
Job No. 305
Job No. 306

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