Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. ORs 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 Other

Patients Patients Total

Units produced 610 870 1,480

Equip hours used 240 150 390

Direct labor-hours 460 180 640

Direct labor costs $36,800 $10,800 $47,600

Overhead costs $50,050

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 Amount Related to:

Utilities $4,840 Equip-hours

Supplies $12,630 Labor-hours

Indirect labor and

supervision $20,650 Labor-hours

Equip depreciation

and maintenance $8,460 Equip-hours

Miscellaneous $3,470 Equip-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.