CLEARWATER HOSPITAL

Number of smears 2,700

Number of blood tests 900

Number of plates purchased 16,000

Cost of plates$38,400

Quantity discount allowed 4%

Unused plates at month beginning -0-

Unused plates at month end 2,000

Labour hours used 1,800

Cost of labour hours$18,450

Variable overhead costs$11,700

Fixed overhead cost$10,400

Nationwide averages:

Number of plates per test 3

Cost per plate$2.50

Time for smear (hours) 0.30

Time for blood test (hours) 0.60

Average cost of lab time per hour$12.00

Variable overhead rate per hour$6.00

Fixed overhead rate per hour*$8.00

*Based on denominator activity level of 1,250 hours per month

Part 1 Data:

Actual Quantity Purchased

Actual Price

Standard Price

Actual Quantity Used

Standard Quantity Allowed for Actual Output

Materials Price and Quantity Variance:

Actual Quantity Purchased at Actual Price

Actual Quantity Purchased at Standard Price

Actual Quantity Used at Standard Price

Standard Quantity Allowed for Actual Output at Standard Price

Price Variance

Quantity Variance

Part 2a Data:

Actual Hours of Input

Actual Rate

Standard Hours Allowed for Actual Output

Standard Rate

Labour Rate and Efficiency Variances

Actual Hours of Input at Actual Rate

Actual Hours of Input at Standard Rate

Standard Hours Allowed for Actual Output at Standard Rate

Rate Variance

Efficiency Variance

Total Variance

2b

In an effort to reduce costs, Clearwater Hospital employs only one-half certified technicians and one-half assistants. Would you recommend that this policy be continued? Explain.

Part 3 Data:

Actual Hours of Input

Actual Rate

Standard Hours Allowed for Actual Output

Standard Rate

Variable Overhead Spending and Efficiency Variances:

Actual Hours of Input at Actual Rate

Actual Hours of Input at Standard Rate

Standard Hours Allowed for Actual Output at Standard Rate

Spending Variance

Efficiency Variance

Total Variance

Is there any relation between the variable overhead efficiency variance and the labour efficiency variance? Explain.

Part 4 Data:

Standard Hours Allowed for Actual Output

Standard Rate

Fixed Overhead Budget and Volume Variances:

Actual Fixed Overhead Cost

Flexible Budget Fixed Overhead Cost

Fixed Overhead Cost Applied to Work in Process

Budget Variance

Volume Variance

Total Variance