Victoria Hospital uses a job cost system for all patients who have surgery. In March, the pre- operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 4 000 nursing hours and 2 000 nursing hours respectively. The budgeted nursing overhead charges for EACH department for the month were $168 000 and $132 000 respectively. The hospital floor for patients who had undergone surgery, had budgeted overhead costs of $1 200 000 and 15 000 nursing hours for the month. For patient Fred Adams, actual hours incurred were eight in the pre-operating room and four in the operating room. He was in the hospital for 4 days (96 hours). Other costs related to Adams were: PRE-OP Costs OR Costs In-room Costs Patient medicine $ 200 $ 500 $2 400 Direct nursing time $1 000 $2 000 $3 000 The hospital uses a budgeted overhead rate for applying overheads to patient stays. Required: i. Identify THREE industries suited to using service costing in cost ascertainment. ii. Identify the applicable overhead rate for each of the three service areas. iii. What is the total cost of the stay of patient Fred Adams in the hospital?
Victoria Hospital uses a
operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 4 000
nursing hours and 2 000 nursing hours respectively. The budgeted nursing overhead charges for
EACH department for the month were $168 000 and $132 000 respectively. The hospital floor
for patients who had undergone surgery, had budgeted overhead costs of $1 200 000 and 15 000
nursing hours for the month. For patient Fred Adams, actual hours incurred were eight in the
pre-operating room and four in the operating room. He was in the hospital for 4 days (96 hours).
Other costs related to Adams were:
PRE-OP Costs OR Costs In-room Costs
Patient medicine $ 200 $ 500 $2 400
Direct nursing time $1 000 $2 000 $3 000
The hospital uses a budgeted overhead rate for applying
Required:
i. Identify THREE industries suited to using service costing in cost ascertainment.
ii. Identify the applicable overhead rate for each of the three service areas.
iii. What is the total cost of the stay of patient Fred Adams in the hospital?
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