Calculate the predetermined overhead rate for the operating room, and determine the charge to Candice.

PROBLEM 2-19. Service Company Use of Predetermined
Overhead Rate

SouthwestCommunityHospitaluses 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 overhead 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.

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