Question - Elmbrook Hospital uses a job-order costing system for all patients who have surgery. The following information is available:
Budgeted indirect costs-pre-operating room $84,000
Budgeted indirect costs-operating room $66,000
Budgeted indirect costs-surgery recovery floor $600,000
Budgeted nursing hours-pre-operating room 4,000
Budgeted nursing hours-operating room 1,000
Budgeted nursing hours-surgery recovery floor 7,500
The cost driver for all indirect costs is nursing hours. The hospital uses a budgeted rate for indirect costs. A patient spent 8 hours in the pre-operating room, 4 hours in the operating room and 96 hours on the surgery recovery floor. What amount of indirect costs will be applied to this patient?
A) $336.00
B) $600.00
C) $7,680
D) $8,112
The answer should be D. Can you please show the working out so I am able to comprehend how you got the answer?