Disposable supplies $340,000
Depreciation expense 64,000
Utilities 26,000
Nurse salaries 312,400
Technician wages 131,200
Total operating room overhead $873,600
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 week. In addition, the operating room will be shut down four weeks per year for general repairs.
a. Determine the predetermined operating room overhead rate for the year.
b. Wayne Lawrence had a four-hour procedure on January 15. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)?
c. During January, the operating room was used 232 hours. The actual overhead costs incurred for January were $65,500. Determine the overhead under- or overapplied for the period.
Answer:
a. Estimated annual operating room overhead: $873,600
Estimated operating room activity base, number of operating room hours:
Hours per day………………………………………………………… 8
Days per week……………………………………………………… × 7
Weeks per year (net of maintenance weeks)…………………… × 48
Estimated annual operating room hours………………………… 2,688
Predetermined surgical overhead rate:
$873,600
2,688 hours
= $325 per hour
b. Wayne Lawrence’s procedure:
Number of surgical room hours………………………………… 4
Predetermined surgical room overhead rate…………………… × 325
Procedure overhead………………………………………………… $1,300
c. Actual hours used in January……………………………………………………… 232
Predetermined surgical room overhead rate…………………………………… × $ 325
Surgical room overhead applied, January……………………………………… $75,400
Actual surgical room overhead incurred, January…………………………… 65,500
Overapplied surgical room overhead (credit balance)………………………… $ 9,900