John Fleming, chief administrator for Valley View Hospital, is concemed about the costs for tests in the hospitar's lab. Charges for lab tests are conisistently higher at Valley View than at other hospitals and have resulted in many complaints. Also, because of 5 trict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental urits have not been high enought to cover lab costs. Mr. Fleming has asked you to evaluate costs in the hospital's lab for the past month. The following information is available: a. Two types of tests are performed in the lab-blood tests and smears. During the past month, 650 blood tests and 2,800 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 14,000 plates at a cost of $40,880 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 $19,260 d. The lab's variable overhead cost last month totaled $13,320 Valley View Hospital has never used standard costs. By searching industry literature, however, 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. Labov: Each blood test should require 0.8 hours to complete, and each smear should require 0.40 hours to complete. The average cost of this lab time is $1100 per hour Overhead Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.90 per hour. Required: 1. Compute a materiais 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 etficiency 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 Hospinal employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? 3. Compute the variable overhead rate and efficiency variances 3-b. I5 theie any relation between the variable overhead efficiency variance and the labor efficiency variance