21 John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital's lab. Charges for lab tests are consistently higher at Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has asked you to evaluate costs in the hospital's lab for the past month. The following information is available: a. Two types of tests are performed in the lab-blood tests and smears. During the past month, 1,300 blood tests and 4,000 smears were performed in the lab b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 20,000 plates at a cost of $79,800. 3,000 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. c. During the past month, 3,000 hours of labor time were recorded in the lab at a cost of $33,900. d. The lab's variable overhead cost last month totaled $25,800 Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs Plates: Three plates are required per lab test. These plates cost $4.20 each and are disposed of after the test is completed. Labor Each blood test should require 0.8 hours to complete, and each smear should require 0.40 hours to complete. The average cost of this lab time is $12.20 per hour. Overhead Overhead cost is based on direct labor-hours. The average rate for variable overhead is $8.10 per hour Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month 2. For labor cost in the lab a. Compute a labor rate variance and a labor efficiency variance. b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three fourths assistants. Would you recommend that this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Reg1 Reg 2A Fe 20 Reg 3A Reg 38 Comes a mate variance for the nates nurhased last month and a materials antity Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates month 2. For labor cost in the lab a. Compute a labor rate variance and a labor efficiency variance b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to redu Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that th be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Req 1 Req ZA Req 28 Req 3A Req 38 Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (ie., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance Req 2A > Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used la month. 2. For labor cost in the lab a Compute a labor rate variance and a labor efficiency variance. b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce cost Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this polic be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Req 3A Req 38 For labor cost in the lab, Compute a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "u" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance ences Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used month 2. For labor cost in the lab a. Compute labor rate variance and a labor efficiency variance b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce com Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this po be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Req 3A Req 38 In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? Yes ONO month 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used 2. For labor cost in the lab a Compute a labor rate variance and a labor efficiency variance b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce c Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this p be continued? 3-a Compute the variable overhead rate and efficiency variances 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Req 3A Req 38 Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (ie, zero variance). Input all amounts as positive values.) Variable averhead rate variance Variable overhead efficiency variance Required: Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used l 2. For labor cost in the lab month, a. Compute a labor rate variance and a labor efficiency variance. b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce cos Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this polm be continued? 3-a. Compute the variable overhead rate and efficiency variances, 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Req 3A Req 3B Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Yes ONO