Direct Labor Costs and Overhead
Mr. Robbins medical records indicated that a total of 20
labor hours were directly used in providing his care. The cost of the labor was
$380. It was expected before the beginning of the year that a total of 90,000
direct labor hours would be consumed by the health care org. patients, at a
cost of $1,350,000. The total overhead to be allocated to patients was expected
to be $810,000. Determine the overhead to be assigned to Mr. Robbins based on
the data given above. First, assign overhead on a basis of direct labor hours;
and second, assign overhead on the basis of direct labor cost. Why might the
result differ?
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