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Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR's management wants to compute the costs of performing tests
Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR's management wants to compute the costs of performing tests for two different types of patients: those who are hospitalized (including those in emergency rooms) and those who are not hospitalized but are referred by physicians. The data for June for the two categories of patients follow. Total 1,500 Hospital Patients 620 250 500 $40,000 Units (i.e., procedures) produced Equipment-hours used Direct labor-hours Direct labor costs Overhead costs Other Patients 880 130 170 $10, 200 380 670 $50, 200 $ 49,930 The accountant first assigns overhead costs to two pools: overhead related to equipment-hours and overhead related to labor-hours. The analysis of overhead accounts by the cost accountant follows. Account Utilities Supplies Indirect labor and supervision Equipment depreciation and maintenance Miscellaneous Amount $ 4,900 12,510 20, 320 8,780 3,420 Related to: Equipment-hours Labor-hours Labor-hours Equipment-hours Equipment-hours Required: a. Compute the predetermined overhead rates assuming that Owl-Eye Radiologists uses equipment-hours to allocate equipment-related overhead costs and labor-hours to allocate labor-related overhead costs. b. Compute the total costs of production and the cost per unit for each of the two types of patients undergoing tests in June. Compute the predetermined overhead rates assuming that Owl-Eye Radiologists uses equipment-hours to allocate equipment related overhead costs and labor-hours to allocate labor-related overhead costs. Overhead Rate per hour Equipment-related Labor-related per hour Compute the total costs of production and the cost per unit for each of the two types of patients undergoing tests in June. (Round "Cost per unit" to 2 decimal places.) Hospital Patients Other Patients Total cost Cost per unit
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