Problem
Mr. Robbins's detailed 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 organization's 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 Robbins based on the data given. Solve this problem in two ways: First, assign overhead on the basis of direct labor hours, and second, assign overhead on the basis of direct labor cost. Why might your results differ?