Question

Question 1: Total 11 Marks

Gadgets Care resorts to Job-costing in costing and then billing its aged clients. During June, 2018, the firm management budgeted 4125 Care Hours and 2160 Care Hours for the Speciality Room (SPL-R) and the Intensive Care room (INC-R), respectively. The care overhead costs budgeted by the management for each of the room types for June 2018 were $271 500 and $235 000, respectively. The management had budgeted care overhead costs of $990 000 and 16150 care hours, for June 2018, for the general Open Area (GNO-A) of the care facility. One aged client, Mark, spent ten hours and five hours, respectively in the SPL-R and INC-R rooms. Mark spent 100 additional hours at the facility in GNO-A. The care facility has also incurred the following costs on Mark:

	SPL-R	INC-R	Additional Rooms cost
Supplies costs	$219	$491	$2370
Direct care time cost	$1150	$2209	$3125

The management at the care facility applies care overhead costs to clients on the basis of a budgeted overhead rate.

Required:

Work out the total cost the care facility incurred on Mark’s stay (Round off all calculations to the nearest unit/dollar), using the following template/format:

Costs charged to client, Mark:
	SPL-R	INC-R	Additional Room costs	Totals
Direct cost
Direct cost
Care Overhead cost:
SPL-R
INC-R
GNO-A
Total cost:

Answer 1

Total cost the care facility incurred on Mark’s stay
Calculation of Predetermined OH application rate:	SPL-R	INC-R	GNO-A
Budgeted hrs.	4125	2160	16150
Care OH costs	271500	235000	990000
Budgeted /Pre-determined OH appln. Rate/hr.(Cost/hrs.)	65.82	108.80	61.30
Costs charged to client, Mark:
	SPL-R	INC-R	Additional Room costs	Totals
Supplies costs	219	491	2370	3080
Direct care time cost	1150	2209	3125	6484
Care Overhead cost:
SPL-R (10hrs.*$ 65.82/hr.)	658.2			658.2
INC-R (5hrs.*$ 108.80/hr.)		544		544
GNO-A (100 hrs.* $ 61.30/hr.)			6130	6130
Total cost:	2027.2	3244	11625	16896.2