Greenview Hospital operated at 120% of normal capacity in two of its departments during the year. It operated 120% times 20,000 normal capacity direct labor nursing hours in routine services and it operated 120% times 20,000 normal capacity equipment hours in the laboratory. The lab allocates overhead by measuring minutes and hours the equipment is used; thus equipment hours.

Assumptions:

For Routine Services Nursing:

20,000 hours 120% = 24,000 direct labor nursing hours.

Budgeted Overhead at 24,000 hours = $42,000 fixed plus $6,000 variable = $48,000 total.

Actual Overhead at 24,000 hours = $42,000 fixed plus $7,000 variable = $49,000 total.

Applied Overhead for 24,000 hours at $2.35 = $56,400.

For Laboratory:

20,000 hours 120% = 24,000 equipment hours.

Budgeted Overhead at 24,000 hours = $59,600 fixed plus $11,400 variable = $71,000 total.

Actual Overhead at 24,000 hours = $59,600 fixed plus $11,600 variable = $71,200 total.

Applied Overhead for 24,000 hours at $3.455 = $82,920.

Required

1. Set up a worksheet for applied overhead costs and volume variance with a column for Routine Services Nursing and a second column for Laboratory.

2. Set up a worksheet for actual overhead costs and budget variance with a column for Routine Services Nursing and a second column for Laboratory.

3. Set up a worksheet for volume variance and budget variance totaling net variance with a column for Routine Services Nursing and a second column for Laboratory.

4. Insert input data from the Assumptions.

5. Complete computations for all three worksheets.