Plainview Home Care, a nonprofit organization, uses a predetermined overhead rate based on direct labor costs...

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Plainview Home Care, a nonprofit organization, uses a predetermined overhead rate based on direct labor costs to apply its service overhead to individual patient accounts. Total patient costs consist of the cost of medications, direct labor costs and applied service overhead; the total patient costs are billed to the patient's insurance carrier for reimbursement. Two types of care are provided: Hospice Care, which focuses on palliative (i.e., pain relief) treatments for terminally ill patients, and In-Home Cleaning Services. Nursing personnel provide the palliative care, while cleaning personnel perform the cleaning services. The predetermined overhead rates for the year are 200 percent of direct labor costs for the Hospice Care department and 60 percent of direct labor costs for the In-Home Cleaning Services department. Charlie Jones, a terminally ill patient enrolled during the year, incurred the following costs: In-Home Hospice Cleaning Medications $3,000 $ -0- Direct labor costs ? $5,000 Service overhead $40,000 ? The total costs billed to Mr. Jones' insurance company should be: A. $48,000 B. $63,000 C. $8,000 D. $71,000 Plainview Home Care, a nonprofit organization, uses a predetermined overhead rate based on direct labor costs to apply its service overhead to individual patient accounts. Total patient costs consist of the cost of medications, direct labor costs and applied service overhead; the total patient costs are billed to the patient's insurance carrier for reimbursement. Two types of care are provided: Hospice Care, which focuses on palliative (i.e., pain relief) treatments for terminally ill patients, and In-Home Cleaning Services. Nursing personnel provide the palliative care, while cleaning personnel perform the cleaning services. The predetermined overhead rates for the year are 200 percent of direct labor costs for the Hospice Care department and 60 percent of direct labor costs for the In-Home Cleaning Services department. Charlie Jones, a terminally ill patient enrolled during the year, incurred the following costs: In-Home Hospice Cleaning Medications $3,000 $ -0- Direct labor costs ? $5,000 Service overhead $40,000 ? The total costs billed to Mr. Jones' insurance company should be: A. $48,000 B. $63,000 C. $8,000 D. $71,000