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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,
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 fe.g. surgeons, anesthesiologists, radiologists, and nurses) assocloted with specific surglcol procedures and tests are traced to individual patients. All other costs, such as depreclation of medical equipment, insurance, utities, incidental medical supplies, and the fabor costs assoclated with around-theclock monitoring of petients 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 potient-day) to allocate overhead costs to patients. Recently a menber of the hospital's accounting staff has suggested using two predetermined overhead rates (asocated based on the number of patient-days) to improve the occuracy of the costs allocated to patients. The first overheod rate would include all overhead costs within the intenshe Care Unit (CU) and the second overhead rate would include all Other overhead costs. Information pertalning to the hospitals estimated number of patient-days, its estimoted overhead costs, and two of its patients-Patient A and Patient 8 -is provided below. Requlred: 1. Assuming McCullough calculates two overhead rates as cecommended 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. 2. Assuming McCullough continues to use only one predetermined overhead rate, calcuiate: a. The predeterminad overhead rate. b. The total cost, Including direct materiais, direct labor and applied ovetheod, assigned to Patient A and Patient E, Required: 1. Assuming McCullough calculates two overheod 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 applled overhead, assigned to Patient A and Patient B. 2. Assuming McCullough continues to use only one predetermined overhead rate, calculate: a. The predetermined overhead rate. b. The total cost, Including direct materials, direct lobor and applled overhead, assigned to Potient A and Patient B. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermedlate calculations and final answers to the nearest dollar amount.)
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