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Problem 10-12 (Algo) Variance Analysis in a Hospital [LO10-1, LO10-2, LU10-3] John Fleming, chief administrator for Valley View Hospital, is concerned about the conts for tests in the hospital's lab. Charges foc lab tests are consistently thigher ot Valley View than at other hospitats and have resuited in many complaints. Also, because of strict regulations on amounts reimbursed foc lab tests, payments teceived from. insurance companies and governmental units have not been high enough to cower lab costs Mc Feming has asked you to evaluate costs in the hospitaf's lab for the past month. The following information is avaliable: a. Two types of tests are performed in the lab-blood tests and smears. During the past month. 650 blood lests and 2,800 smears were performed in the lab b. Smakl glass plates are used in both types of tests. During the past month, the hospital purchased 14,000 plates at a cost of 540,880,1,800 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, 1,800 hours of labor time were recorded in the lab at a cost of 519260 . d. The lab's variable overhead cost last month totaled $13,320. Valiey View Hospital has never used standard costs, By searching industry literature, howevec, you have determined the following nationwide averages for hospital labs: 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 0.8 hours to complete, and each smear should require 0.40 bours to complete. The average cost of this lab time is $11.00 per hout Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $690 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. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates last month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no ef (l.e., zero variance). Input alf amounts as positive values.) Complete this question by entering your answers in the tabs below. For labor cost in the lab, Compute a labor rate variance and a labor efficiency variance. (Indicate the effect: by selecting " F " for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all a Complete this question by entering your answers in the tabs below. In most hospitals, one-half of the workers in the lab are senior technicians and one-haif are assistants. In an effort to reduce sosts, Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend hat this policy be continued? Complete this question by entering your answers in the tabs below. 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 (i.e., zero variance). Input all amounts as positive values.) Complete this question by entering your answers in the tabs below. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Yos