Regis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $2,172,240 per year and the facility (which operates monthly at capacity) has a total of 60 beds available. (Assume a 360-day year.) The facility’s accountant is considering a new overhead allocation method using the following information: OH Cost Cost Driver (Quantity) Rooms (depreciation, cleaning, etc.) $302,400 # of rooms (25 double) 35 Laundry 90,720 # of beds 60 Nursing care 788,400 # of nurse-hours annually 43,800 Physical therapy 576,000 # of hours of rehab 8,000 General services 414,720 # of patient days ? Rooms are cleaned daily; laundry for rooms is done, on average, every other day. a. How many patient days are available at Regis Place? Answer days b. What is the current overhead rate per patient day? Note: Round your answer to the nearest whole dollar. $Answer c. Using the individual cost drivers, what is the overhead rate for each type of cost? Note: Round your answers to the nearest whole dollar. Rooms: Answer Laundry: Answer Nursing care: Answer Physical therapy: Answer General services: Answer d. Assume a patient stayed at Regis Place for six days. The patient was in a single room and required six hours of nursing care and 30 hours of physical therapy. 1. What overhead cost would be assigned to this patient under the current method of overhead allocation? Note: Round your answer to the nearest whole dollar. $Answer 2. What overhead cost would be assigned to this patient under the ABC method of overhead allocation? Note: Use the rounded rates from part (c) in your calculations. Rooms Answer Laundry Answer Nursing care Answer Physical therapy Answer General services Answer Total Answer e. Assume a patient stayed at Regis Place for six days. The patient was in a double room and required six hours of nursing care but did not require any physical therapy.
OH allocation using cost drivers
Regis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $2,172,240 per year and the facility (which operates monthly at capacity) has a total of 60 beds available. (Assume a 360-day year.) The facility’s accountant is considering a new overhead allocation method using the following information:
| OH Cost | Cost Driver (Quantity) | ||
|---|---|---|---|
| Rooms ( |
$302,400 | # of rooms (25 double) | 35 |
| Laundry | 90,720 | # of beds | 60 |
| Nursing care | 788,400 | # of nurse-hours annually | 43,800 |
| Physical therapy | 576,000 | # of hours of rehab | 8,000 |
| General services | 414,720 | # of patient days | ? |
Rooms are cleaned daily; laundry for rooms is done, on average, every other day.
a. How many patient days are available at Regis Place? Answer days
b. What is the current overhead rate per patient day?
Note: Round your answer to the nearest whole dollar.
$Answer
c. Using the individual cost drivers, what is the overhead rate for each type of cost?
Note: Round your answers to the nearest whole dollar.
| Rooms: | Answer |
| Laundry: | Answer |
| Nursing care: | Answer |
| Physical therapy: | Answer |
| General services: | Answer |
d. Assume a patient stayed at Regis Place for six days. The patient was in a single room and required six hours of nursing care and 30 hours of physical therapy.
1. What overhead cost would be assigned to this patient under the current method of overhead allocation?
Note: Round your answer to the nearest whole dollar.
$Answer
2. What overhead cost would be assigned to this patient under the ABC method of overhead allocation?
Note: Use the rounded rates from part (c) in your calculations.
| Rooms | Answer |
| Laundry | Answer |
| Nursing care | Answer |
| Physical therapy | Answer |
| General services | Answer |
| Total | Answer |
e. Assume a patient stayed at Regis Place for six days. The patient was in a double room and required six hours of nursing care but did not require any physical therapy.
1. What overhead cost would be assigned to this patient under the current method of overhead allocation?
Note: Round your answer to the nearest whole dollar.
$Answer
2. What overhead cost would be assigned to this patient under the ABC method of overhead allocation?
Note: Use the rounded rates from part (c) in your calculations.
| Rooms | Answer |
| Laundry | Answer |
| Nursing care | Answer |
| General services | Answer |
| Total | Answer |
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