4 points eBook Hint Print Reference McCullough Hospital uses a job-order costing system to assign costs...

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4 points eBook Hint Print Reference McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials include a variety of items such as pharmaceutical drugs, heart valves, artificial hips, and pacemakers. Its direct labor costs (e.g.. surgeons, anesthesiologists, radiologists, and nurses) associated with specific surgical procedures and tests are traced to individual patients. All other costs, such as depreciation of medical equipment, Insurance, utilities, incidental medical supplies, and the labor costs associated with around-the-clock monitoring of patients are treated as overhead costs. Historically, McCullough has used one predetermined overhead rate based on the number of patientdays (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. For the most recent period, this predetermined rate was based on three estimates-fixed overhead costs of $17,680,000, variable overhead costs of $110 per patient-day, and a denominator volume of 20,000 patient-days. Recently a member of the hospital's accounting staff has suggested using two predetermined overhead rates (allocated based on the number of patient-days) to improve the accuracy of the costs allocated to patients. The first overhead rate would include all overhead costs within the Intensive Care Unit (ICU) and the second overhead rate would include all Other overhead costs. Information pertaining to these two cost pools and two of the hospital's patients-Patient A and Patient B-is provided below. Estimated number of patient-days Estimated fixed overhead cost Estimated variable overhead cost per patient-day Direct materials Direct labor Total number of patient-days (including ICU) Number of patient-days spent in ICU Required (see below for hints, if needed): ICU 2,000 Other 18,000 Total 20,000 $ $ $ 3,248,000 14,432,000 17,680,000 $ 236 $ 96 Patient A Patient B $ 5,700 $ 7,400 $ 28,000 $38,400 14 21 0 7 1Assuming McCullough continues to use only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, including direct materials, direct labor, and applied overhead, assigned to Patient A and Patient B. 2. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: a. The ICU and Other overhead rates. b. The total cost, including direct materials, direct labor, and applied overhead, assigned to Patient A and Patient B. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.) 1a. Predetermined overhead rate $ 884.00 per patient-day 1b. Total cost for patient A $ 49,380 1b. Total cost for patient B $ 66,380 2a. Predetermined ICU overhead rate $ 1,624.00 per patient-day 2a. Predetermined Other overhead rate $ 801.78 per patient-day 2b. Total cost for patient A $ 48,229 2b. Total cost for patient B $ 71,389 Hints: Part 1a: Make sure to include both the total variable overhead for each department (you will have to calculate this for each department) and the total fixed overhead in your numerator when calculating the POHR. (See the video solution for Example 2-5, part a in the course packet for an example of how to do this calculation). Part 2a: Make sure to include each department's variable and fixed overhead in your calculation. (See the video solution for Example 2-5, part d in the course packet for an example of how to do these calculations). Part 2b: Make sure to keep in mind that the table lists 'total' patient days (including ICU days) and 'ICU' days for each patient. So you need to subtract to get the non-ICU days when assigning overhead for 'other' activities. 4 points eBook Hint Print Reference McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials include a variety of items such as pharmaceutical drugs, heart valves, artificial hips, and pacemakers. Its direct labor costs (e.g.. surgeons, anesthesiologists, radiologists, and nurses) associated with specific surgical procedures and tests are traced to individual patients. All other costs, such as depreciation of medical equipment, Insurance, utilities, incidental medical supplies, and the labor costs associated with around-the-clock monitoring of patients are treated as overhead costs. Historically, McCullough has used one predetermined overhead rate based on the number of patientdays (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. For the most recent period, this predetermined rate was based on three estimates-fixed overhead costs of $17,680,000, variable overhead costs of $110 per patient-day, and a denominator volume of 20,000 patient-days. Recently a member of the hospital's accounting staff has suggested using two predetermined overhead rates (allocated based on the number of patient-days) to improve the accuracy of the costs allocated to patients. The first overhead rate would include all overhead costs within the Intensive Care Unit (ICU) and the second overhead rate would include all Other overhead costs. Information pertaining to these two cost pools and two of the hospital's patients-Patient A and Patient B-is provided below. Estimated number of patient-days Estimated fixed overhead cost Estimated variable overhead cost per patient-day Direct materials Direct labor Total number of patient-days (including ICU) Number of patient-days spent in ICU Required (see below for hints, if needed): ICU 2,000 Other 18,000 Total 20,000 $ $ $ 3,248,000 14,432,000 17,680,000 $ 236 $ 96 Patient A Patient B $ 5,700 $ 7,400 $ 28,000 $38,400 14 21 0 7 1Assuming McCullough continues to use only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, including direct materials, direct labor, and applied overhead, assigned to Patient A and Patient B. 2. Assuming McCullough calculates two overhead rates as recommended by the staff accountant, calculate: a. The ICU and Other overhead rates. b. The total cost, including direct materials, direct labor, and applied overhead, assigned to Patient A and Patient B. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.) 1a. Predetermined overhead rate $ 884.00 per patient-day 1b. Total cost for patient A $ 49,380 1b. Total cost for patient B $ 66,380 2a. Predetermined ICU overhead rate $ 1,624.00 per patient-day 2a. Predetermined Other overhead rate $ 801.78 per patient-day 2b. Total cost for patient A $ 48,229 2b. Total cost for patient B $ 71,389 Hints: Part 1a: Make sure to include both the total variable overhead for each department (you will have to calculate this for each department) and the total fixed overhead in your numerator when calculating the POHR. (See the video solution for Example 2-5, part a in the course packet for an example of how to do this calculation). Part 2a: Make sure to include each department's variable and fixed overhead in your calculation. (See the video solution for Example 2-5, part d in the course packet for an example of how to do these calculations). Part 2b: Make sure to keep in mind that the table lists 'total' patient days (including ICU days) and 'ICU' days for each patient. So you need to subtract to get the non-ICU days when assigning overhead for 'other' activities.