Short Stay Surgery uses a job costing system for all patients who have surgery. The clinic uses a normal costing system with operating hours as the allocation base. For the month of March, 3,200 operating hours were estimated for use of the surgery suites. The estimated overhead costs for the suites were $640,000. Patient Sarah Handy was in surgery for 2.5 hours.
Other costs related to Handy's surgery include:
Patient medicine $ 50
Cost of nurses 250
Cost of supplies 150
a)Determine the budgeted (i.e., estimated)overhead rate for the surgery suites.
b)Determine the total costs for Handy's surgery.
c)Short Stay Surgery would like to know which of its services is more profitable so that it can emphasize that service in advertisements. Discuss whether each of the following types of information is relevant for this product emphasis decision:

Question

Quizplus · Accepted Answer

The Answer of Short Stay Surgery uses a job costing system for all patients who have surgery. The clinic uses a normal costing system with operating hours as the allocation base. For the month of March, 3,200 operating hours were estimated for use of the surgery suites. The estimated overhead costs for the suites were $640,000. Patient Sarah Handy was in surgery for 2.5 hours.
Other costs related to Handy's surgery include:
Patient medicine $ 50
Cost of nurses 250
Cost of supplies 150
a)Determine the budgeted (i.e., estimated)overhead rate for the surgery suites.
b)Determine the total costs for Handy's surgery.
c)Short Stay Surgery would like to know which of its services is more profitable so that it can emphasize that service in advertisements. Discuss whether each of the following types of information is relevant for this product emphasis decision:

Short Stay Surgery Uses a Job Costing System for All