Predetermined Factory Overhead Rate

Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be:

Line Item Description	Amount
Disposable supplies	$392,600
Depreciation expense	98,300
Utilities	41,900
Nurse salaries	365,000
Technician wages	166,200
Total operating room overhead	$1,064,000

The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Determine the predetermined operating room overhead rate for the year. fill in the blank 1 of 3$ per hour

b. Ebony Jones had a six-hour procedure on January 22. How much operating room overhead would be charged to her procedure, using the rate determined in part (a)? fill in the blank 2 of 3$

c. During January, the operating room was used 260 hours. The actual overhead costs incurred for January were $95,500. Determine the overhead under- or overapplied for the period. Enter your answer as a positive number. fill in the blank 3 of 3$

overappliedunderapplied