Question
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:
DATA
Disposable supplies $402,900
Depreciation expense 100,900
Utilities 43,000
Nurse salaries 374,600
Technician wages 170,600
Total operating room overhead $1,092,000
The overhead costs will be assigned to procedures, based on the number of surgical room hours. The number of hours per day and days per week that Poehling Medical Center expects to use the operating room and the number of weeks per year for general repairs are provided below:
DATA
Hours per day 8
Days per week 7
Weeks per year (net of maintenance weeks) 50
REQUIRED:
Using the above information, determine the following amounts:
"Select the correct answer in the dropdown in cell B30. Using formulas and cell references from the problem data, perform the required analysis.
Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading."
Formulas
a. Predetermined surgical overhead rate (per hour)
b. Number of surgical room hours 5
Procedure overhead
c. Actual hours used in January 230
Actual surgical room overhead incurred, January $86,700
surgical room overhead
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:
DATA
Disposable supplies $402,900
Depreciation expense 100,900
Utilities 43,000
Nurse salaries 374,600
Technician wages 170,600
Total operating room overhead $1,092,000
The overhead costs will be assigned to procedures, based on the number of surgical room hours. The number of hours per day and days per week that Poehling Medical Center expects to use the operating room and the number of weeks per year for general repairs are provided below:
DATA
Hours per day 8
Days per week 7
Weeks per year (net of maintenance weeks) 50
REQUIRED:
Using the above information, determine the following amounts:
"Select the correct answer in the dropdown in cell B30. Using formulas and cell references from the problem data, perform the required analysis.
Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading."
Formulas
a. Predetermined surgical overhead rate (per hour)
b. Number of surgical room hours 5
Procedure overhead
c. Actual hours used in January 230
Actual surgical room overhead incurred, January $86,700
surgical room overhead
Answers
GPT-4o mini
To determine the predetermined surgical overhead rate and the number of surgical room hours, we can follow these steps:
### Calculating the Predetermined Surgical Overhead Rate (per hour)
1. **Calculate Total Surgical Room Hours per Year**:
\[
\text{Total Hours per Year} = \text{Hours per Day} \times \text{Days per Week} \times \text{Weeks per Year}
\]
\[
= 8 \, \text{hours/day} \times 7 \, \text{days/week} \times 50 \, \text{weeks/year}
\]
\[
= 2,800 \, \text{hours/year}
\]
2. **Calculate the Predetermined Surgical Overhead Rate**:
\[
\text{Predetermined Overhead Rate} = \frac{\text{Total Operating Room Overhead}}{\text{Total Surgical Room Hours}}
\]
\[
= \frac{1,092,000}{2,800}
\]
\[
= 390 \, \text{(rounded to nearest dollar)}
\]
### Calculating the Number of Surgical Room Hours
Given that:
- Actual hours used in January = 230 hours
### Summary of Required Amounts
- **a. Predetermined surgical overhead rate (per hour)**: **$390**
- **b. Number of surgical room hours**: **2,800** (total hours calculated for the year)
- **c. Actual hours used in January**: **230 hours**
- **Actual surgical room overhead incurred, January**: **$86,700**
### Finalized Answers
1. **Predetermined surgical overhead rate**: $390
2. **Number of surgical room hours**: 2,800 hours
3. **Actual hours used in January**: 230 hours
4. **Actual surgical room overhead incurred**: $86,700
For the solution breakdown:
- Enter the calculated values in your system (CNOWv2) as needed in the respective fields in the exercise.
### Calculating the Predetermined Surgical Overhead Rate (per hour)
1. **Calculate Total Surgical Room Hours per Year**:
\[
\text{Total Hours per Year} = \text{Hours per Day} \times \text{Days per Week} \times \text{Weeks per Year}
\]
\[
= 8 \, \text{hours/day} \times 7 \, \text{days/week} \times 50 \, \text{weeks/year}
\]
\[
= 2,800 \, \text{hours/year}
\]
2. **Calculate the Predetermined Surgical Overhead Rate**:
\[
\text{Predetermined Overhead Rate} = \frac{\text{Total Operating Room Overhead}}{\text{Total Surgical Room Hours}}
\]
\[
= \frac{1,092,000}{2,800}
\]
\[
= 390 \, \text{(rounded to nearest dollar)}
\]
### Calculating the Number of Surgical Room Hours
Given that:
- Actual hours used in January = 230 hours
### Summary of Required Amounts
- **a. Predetermined surgical overhead rate (per hour)**: **$390**
- **b. Number of surgical room hours**: **2,800** (total hours calculated for the year)
- **c. Actual hours used in January**: **230 hours**
- **Actual surgical room overhead incurred, January**: **$86,700**
### Finalized Answers
1. **Predetermined surgical overhead rate**: $390
2. **Number of surgical room hours**: 2,800 hours
3. **Actual hours used in January**: 230 hours
4. **Actual surgical room overhead incurred**: $86,700
For the solution breakdown:
- Enter the calculated values in your system (CNOWv2) as needed in the respective fields in the exercise.