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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?

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