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 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 hospitals 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 hospitals estimated number of patient-days, its estimated overhead costs, and two of its patientsPatient A and Patient Bis provided below:

	ICU			Other			Total
Estimated number of patient-days		3,200			16,000			19,200
Estimated fixed overhead cost	$	5,619,200		$	16,224,000		$	21,843,200
Estimated variable overhead cost per patient-day	$	260		$	96

	Patient A			Patient B
Direct materials	$	5,700		$	7,400
Direct labor	$	28,000		$	38,400
Total number of patient-days (including ICU)		21			26
Number of patient-days spent in ICU		0			14

1a.	Predetermined overhead rate		per patient-day
1b.	Total cost for patient A
	Total cost for patient B
2a.	Predetermined ICU overhead rate	$2,016.00	per patient-day
	Predetermined Other overhead rate	$1,110.00	per patient-day
2b.	Total cost for patient A	$57,010
	Total cost for patient B