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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. Units (1.e., procedures) produced Equipment-hours used Direct labor-hours Direct labor costs Overhead costs Hospital Patients 648 230 480 $38,400 Other Patients 880 130 160 59,600 Total 1,520 360 640 $48,000 $50,280 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 $.4,710 12,530 20, 110 9,540 3,390 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
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