Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount. Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities Insurance. Property taxes: Total Doctor A. Doctor B Doctor C During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor D Doctor E Doctor F Total 10,000 3,500 45,000 6,000 78,000 30,000 $ 162,500 2,000 1,850 1,960 2,100 2,500 1,780 12,190 $ The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Required: 1. Explain whether the clinic should use a job costing system or a process costing system. 2. Calculate the applied overhead and identify if it is over or under applied. Show your calculations. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 3. Identify and explain two shortcomings of using predetermined overhead rates to apply overhead. 4. Identify and explain why there is usually a difference between the applied overhead and the actual overhead. 5. Identify and explain the appropriate accounting treatment of this under or over applied overhead amount.