50 units, WILL PROBLEM 3-20 Plantwide versus Multiple Predetermined Overhead Rates: Service Industry L03-1, 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 L03-2, LO3-3, L03-4 Job Order Conting Cong Unit Product Coins pacemakers. Its direct labor costs - Surgeons, anesthesiologists, fologists, and we inted with specific surgical procedures and tests are traced to individual patients. All other such as depreciation of medical equipment, in arance, 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 ore predetermined overhead rate based on the number of patient-days (each night that a patient spends in the hospital counts as one patient-day) to allocate overhead costs to patients. 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 the hospital's estimated number of patient-days, its esti- mated overhead costs, and two of its patients ---Patient A and Patient B-is provided below: ICU Other Total Estimated number of patient-days. 2.000 18,000 20,000 Estimated fixed overhead cost $3.200.000 $14,000,000 $17.200,000 $236 $96 Estimated variable overhead cost per patient-day Patient A Patient B Direct materials $4,500 $6,200 Direct labor. $25,000 $36.000 Total number of patient-days (including ICU). 14 21 Number of patient-days spent in ICU.. 0 7 Required: 1. Assuming McCullough uses only one predetermined overhead rate, calculate: 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 accoun- tant, calculate: The ICU and Other overhead ratcs. The total cost, including direct materials, direct labor and applied overhead, assigned to Patient A and Patient B. 3. What insights are revealed by the staff accountant's approach? PROBLEM 3-21 Plantwide Versus Multiple Predetermined Overhead Rates 103-1. L03-2 C tments-Machining and Assembly. The company