Check my work Problem 9-22 Variance Analysis in a Hospital (LO9-4, LO9-5, L09-6) John Fleming,chiet administrator for Valley View Hospital is concerned about the costs for tests in the hospitals 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. Mc Fleming has asked you to evaluate costs in the hospital's tab for the past month. The following information is available ok a. Two types of tests are performed in the lab-blood tests and smears. During the past month, 600 blood tests and 2.700 smears were performed in the lab Small glass plates are used in both types of tests. During the past month, the hospital purchased 13.500 plates at a cost of $38,070. 1700 of these plates were unused at the end of the month no plotes were on hand at the beginning of the month During the past month, 1,700 hours of labor time were recorded in the lab at a cost of $18,105 The lab's variable overhead cost last month totaled $12,410. int mices Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs PintesThree pintes are required per lab test. These plates cost $3.00 each and are disposed of after the test is completed. Labor Each blood test should require 0.5 hours to complete and each smear should require 0.30 hours to complete. The average cost of this lob time is Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6 80 per hour 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. Compute the variable overhead rate and efficiency variances 36. 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. Reg 1 Reg 2A Req 28 Reg 3A Reg 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 (le, tero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance work Saved 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. 500 blood tests and 2700 smears we b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 13,500 plates at a cost of $38,070 at the end of the month, no plates were on hand at the beginning of the month. c During the past month, 1700 hours of labor time were recorded in the lab at a cost of $18.105. d. The lab's variable overhead cost last month totaled $12.410. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nation Plates: Three plates are required per lab test. These plates cost $3.00 each and are disposed of after the test is completed. Labor Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average costa Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is 56.80 per hour. Required: 1. Compute a materials price variance for the plates purchased last month and a materiais quantity variance for the plates used fast month a. Compute a labor rate variance and a labor efficiency variance. b. in most hospitals, one half of the workers in the lat are senior technicians and one hat are assistants. In an effort to reduce costs, Valley one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? 34. Compute the variable overhead rate and efficiency variances 36. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? ces Complete this question by entering your answers in the tabs below. Req1 Req 2A Reg 2B Reg 3A Reg 38 For labor cost in the lab, Compute a labor rate variance and a labor efficiency variance. (Indicate the effect of each van "P" for favorable, "U" for unfavorable, and "None for no effect (ie, zero variance). Input all amounts as positive value Laborrate variance Labor efficiency variance Reg 1 Reg 23 > a. Compute a labor rate 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 employ 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. 36. 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. Reg 2A Reg 1 Reg 28 Req 3A Req 3B 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 No a. Two types of tests are performed in the lab-blood tests and smears. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 13,500 plates at a cost of $38.070 at the end of the month; no plates were on hand at the beginning of the month. c. During the past month, 1700 hours of labor time were recorded in the lab at a cost of $18,105 d. The lab's variable overhead cost last month totaled $12,410 Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nation Plates: Three plates are required per lab test. These plates cost $3.00 each and are disposed of after the test is completed. Labor Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.80 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 mont 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, Vall one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? 3a. Compute the variable overhead rate and efficiency variances, 36. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? ces Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 25 Req Req 3B Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" te unfavorable, and "None" for no effect (1.e., zero variance). Input all amounts as positive values.) Variable overhead rate variance Variable overhead efficiency variance