Problem 6-50 Two-Stage Allocation and Product Costing (LO 6-5)

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			Other Patients			Total
Units (i.e., procedures) produced		650			800			1,450
Equipment-hours used		230			110			340
Direct labor-hours		460			190			650
Direct labor costs	$	36,800		$	11,400		$	48,200
Overhead costs							$	48,140

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	$	4,790		Equipment-hours
Supplies		12,650		Labor-hours
Indirect labor and supervision		19,850		Labor-hours
Equipment depreciation and maintenance		7,360		Equipment-hours
Miscellaneous		3,490		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-relatedoverhead 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. (Round "Cost per unit" to 2 decimal places.)