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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. Hospital Patients 640 240 Units (ie, procedures) produced Equipment-hours used Direct labor-hours Direct labor costs Overhead costs Other Patients 890 110 160 $9,600 500 $40,000 Total 1,530 350 660 $49,600 $51,080 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 MO Related to Utilities $ 4,790 Equipment-hours Supplies 12,660 Labor hours Indirect labor and supervision 22,320 Labor hours Equipment depreciation and maintenance 7,970 Equipment-hours Miscellaneous 3,340 Equipment-hours Required: 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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