Volume-Based Versus ABC Overhead Rate: Medical Arts Hospital (MAH) Uses

Essay

Volume-based Versus ABC Overhead Rate: Medical Arts Hospital (MAH) uses a hospital-wide overhead rate based on nurse-hours. The intensive care unit (ICU), which has 30 beds, applies over­head using patient-days. Its budgeted cost and operating data for the year follow: Required:
1. Calculate the ICU's overhead costs for the month of June using
a. The hospital-wide rate
b. The ICU department-wide rate
c. The cost driver rates for the ICU department
2. Explain the differences and determine which overhead assignment method is more appropriate