John Fleming, chief administrator for a district hospital, is concemed about costs for tests in the hospital's lab. Fleming has asked you to evaluate costs for the past month. The following information is avallable: a. Basically, two types of tests are performed in the lab-blood tests and smears. Duting the past month, 3,600 blood tests and 4,800 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 24,000 plates at a cost of $58,800 This cost is net of a 6% quantity discount 2.400 of these plates were still on hand unused at the end of the month; there were no plates on hand at the beginning of the month c. During the past month, 2,150 hours of labour time were recorded in the lab. The cost of this labour time was $26,230. d. Variable overhead cost last month in the lab for utilities and supplies totalled $15.050. The hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs PLotes: Tro plates are required per lab test. These plates cost 52.60 each and are disposed of after the test is coepleted. tobourz Each blood test should require 8.30 hour to complete, and each snear should require 0.15 hour to conplete. The average cost of this lab time is \$14.00 per hour. overheodi overhead cost is bssed on direct labgor-hours. The average rate for varfable overneds is s5. a0 per hour. Fleming would like a complete analysis of the cost of plates. labout, and overhead in the lab for the last month so that he can get to the root of the lab's cost problem. Required: 1. Compute a matenals price variance for the plates purchased lost month and a materiats quantity variance for the plates used last month, (indicote the effect of each verionce bv selectina "F" for favourable. "U" for unfovourable. and "None" for no effect li.e. the root of the lab's cost problem. Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicote the effect of each variance by selecting "F" for favourable, "U" for unfovourable, and "None" for no effect (i.e., zero variancel.). 2. For labour cost in the lab: a. Compute a labour rate variance and a labour efficiency variance. (Do not round intermediate calculations. Round "Efficiency variance" answer to 2 decimal pleces. Indicate the effect of each varionce by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).). b. This part of the question is not part of your Connect assignment. 3-a. Compute the variable overhead spending and efficiency variances. (Do not round intermediate calculations. Round "Efficiency variance" answer to 2 decimal places. Indicate the effect of each varionce by selecting "F" for favourable, " U " for unfavourable, and "None" for no effect (i.e., zero variance.).) 3-b. Is there any relationship between the variable ovethead efficiency variance and the labour efficiency variance? Yes No John Fleming, chief administrator for a district hospital, is concemed about costs for tests in the hospital's lab. Fleming has asked you to evaluate costs for the past month. The following information is avallable: a. Basically, two types of tests are performed in the lab-blood tests and smears. Duting the past month, 3,600 blood tests and 4,800 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 24,000 plates at a cost of $58,800 This cost is net of a 6% quantity discount 2.400 of these plates were still on hand unused at the end of the month; there were no plates on hand at the beginning of the month c. During the past month, 2,150 hours of labour time were recorded in the lab. The cost of this labour time was $26,230. d. Variable overhead cost last month in the lab for utilities and supplies totalled $15.050. The hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs PLotes: Tro plates are required per lab test. These plates cost 52.60 each and are disposed of after the test is coepleted. tobourz Each blood test should require 8.30 hour to complete, and each snear should require 0.15 hour to conplete. The average cost of this lab time is \$14.00 per hour. overheodi overhead cost is bssed on direct labgor-hours. The average rate for varfable overneds is s5. a0 per hour. Fleming would like a complete analysis of the cost of plates. labout, and overhead in the lab for the last month so that he can get to the root of the lab's cost problem. Required: 1. Compute a matenals price variance for the plates purchased lost month and a materiats quantity variance for the plates used last month, (indicote the effect of each verionce bv selectina "F" for favourable. "U" for unfovourable. and "None" for no effect li.e. the root of the lab's cost problem. Required: 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicote the effect of each variance by selecting "F" for favourable, "U" for unfovourable, and "None" for no effect (i.e., zero variancel.). 2. For labour cost in the lab: a. Compute a labour rate variance and a labour efficiency variance. (Do not round intermediate calculations. Round "Efficiency variance" answer to 2 decimal pleces. Indicate the effect of each varionce by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).). b. This part of the question is not part of your Connect assignment. 3-a. Compute the variable overhead spending and efficiency variances. (Do not round intermediate calculations. Round "Efficiency variance" answer to 2 decimal places. Indicate the effect of each varionce by selecting "F" for favourable, " U " for unfavourable, and "None" for no effect (i.e., zero variance.).) 3-b. Is there any relationship between the variable ovethead efficiency variance and the labour efficiency variance? Yes No
