Southwest Community Hospital uses a job order costing system to track charges for each patient.
The following charges relate to Candice O'Dea, who had laparoscopic knee surgery:
Pharmacy...............$ 250
Sterile supply..............$ 1,000
Supplies, other...............$ 4,000
Operating room service (nursing staff) .....$ 4,000
Anesthesia.................$ 1,000
Anesthesiologist..............$ 3,000
Southwest charges patients for the use of the operating room based on a predetermined over head rate. The estimated overhead costs of the operating room are $5,000,000, and the activity base is available hours of 2,000.
Required:
a. Calculate the predetermined overhead rate for the operating room, and determine the charge to Candice. Assume that her surgery took 3 hours in the operating room.
b. Calculate the total cost for the knee surgery.