Reithofer Medical Center has a single operating room that is used by local physi
ID: 2499474 • Letter: R
Question
Reithofer 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 the 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 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Reithofer Medical Center expects to use the operating room an average of eight hours per day, seven days per addition, the operating room will be shut down four weeks per year for general repairs. Determine the predetermined operating room overhead rate for the year.Explanation / Answer
a. No of weeks in a year = 52
Non operating weeks = 4
Operating weeks = 48
No. of operating hours = 48 x 7 x 8 = 2688 hours
Total operating room overhead = 873600
Overhead rate per hour = 873600/2688 = $325/hour
b. Overhead to be charged to four-hour procedure = 325x4 = $1300
c. Operating overhead assigned for january = 232x325 = $75400
Actual overhead incurred = $65500
Over applied overhead = $75400 - $65500
= $9900