Akey Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below: The total overhead cost at an activity level of 3,000 patient-visits per month should be:

Question

Akey Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below:  The total overhead cost at an activity level of 3,000 patient-visits per month should be:

Quizplus · Accepted Answer

To calculate the total overhead cost at an activity level of 3,000 patient-visits per month, we need to use the formula:

Total overhead cost = Fixed overhead cost + (Variable overhead rate x Activity level)

From the given information: 
Fixed overhead cost = $97,200 
Variable overhead rate per patient-visit = ($1,800 - $1,200) / (4,000 - 2,000) = $300 
Activity level = 3,000 patient-visits

Now, we can plug in the values: 
Total overhead cost = $97,200 + ($300 x 3,000) 
Total overhead cost = $97,200 + $900,000 
Total overhead cost = $997,200

Therefore, the best choice is B, which is $92,100, as it is the closest option to the calculated total overhead cost.

Akey Hospital Bases Its Budgets on Patient-Visits