Compute the materials price and quantity variances for each material. 3. labor 2. Compute the labor rate and efficiency variances for each operation. PROBLEM 9-22 Variance Analysis in a Hospital LO9-4, LO9-5, LO9-6 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 nd have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for 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 follow information is available: a. b. Two types of tests are performed in the lab- blood tests and smears. During the past month, blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchac 12.000 plates at a cost of $56,400. 1.500 of these plates were unused at the end of the month, mo pluo were on hand at the beginning of the month. During the past month. I. 150 hours of labor time were recorded in the lab at a cost of S21 The lab's variable overhead cost last month totaled $7,820 During the past month, 1.80 c d. Valley View Hospital has never used standard costs. By searching industry literature have determined the following nationwide averages for hospital labs: Plates: Two plates are required per lab test. These plates cost $5.00 each and are disposed of is completed. Labor: Each blood test should require 0.3 hours to complete, and each smear should require O.l complete. The average cost of this lab time is $20 per hour Overhead: Overhead cost is based on direct The average rate for variable overhcad is S6 per b Flexible Budgets, Standard Costs, and Variance Analysis 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. I n 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? Explain. mpute the variable overhead rate and efficiency variances. Is there any relation between the variable ad efficiency variance and the labor efficiency variance 109-2 cncy variance and the labor efficiency variance? Explain. Compute the materials price and quantity variances for each material. 3. labor 2. Compute the labor rate and efficiency variances for each operation. PROBLEM 9-22 Variance Analysis in a Hospital LO9-4, LO9-5, LO9-6 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 nd have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for 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 follow information is available: a. b. Two types of tests are performed in the lab- blood tests and smears. During the past month, blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchac 12.000 plates at a cost of $56,400. 1.500 of these plates were unused at the end of the month, mo pluo were on hand at the beginning of the month. During the past month. I. 150 hours of labor time were recorded in the lab at a cost of S21 The lab's variable overhead cost last month totaled $7,820 During the past month, 1.80 c d. Valley View Hospital has never used standard costs. By searching industry literature have determined the following nationwide averages for hospital labs: Plates: Two plates are required per lab test. These plates cost $5.00 each and are disposed of is completed. Labor: Each blood test should require 0.3 hours to complete, and each smear should require O.l complete. The average cost of this lab time is $20 per hour Overhead: Overhead cost is based on direct The average rate for variable overhcad is S6 per b Flexible Budgets, Standard Costs, and Variance Analysis 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. I n 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? Explain. mpute the variable overhead rate and efficiency variances. Is there any relation between the variable ad efficiency variance and the labor efficiency variance 109-2 cncy variance and the labor efficiency variance? Explain