McCullough Hospital uses a job-order costing system to assign costs to its potients. its direct materials include a variety of items such os pharmaceutical drugs, heart valves, artificial hip5, and pacemokers, its direct labor costs (o. 9 , 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-theclock monitoring of patients are treated os overhead costs: Historically, McCullough has used one predetermined overhead rate bosed on the number of patient-doys (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 $17,360,000, variable overhead costs of $110 per patientday, and a denominator volume of 20,000 patient-days. Recently a member of the hospital's occounting staff has suggested using two predetgrmined overhead rates foliocoted based on the number of patient-days) to improve the accuracy of the costs allocated to pationts. The first overhead rate would include alf overhead costs within the Intensive Core 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. Required: 1. Assuming McCullough continues to use only one predetermined overhead rate, calculate: o. The predetermined overhead rate. b. The total cost, including direct materials, direct labor, and applied overhead, assigned to Pationt A and Patient B. 2. Assuming MeCullough 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. Note: Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to th nearest dollar amount. 1. Assuming McCullough continues to use only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The totai 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 opplied overhead, assigned to Patient A and Patient B. Note: Round "Predetermined overhead rate* to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount
