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 Volley View than ot other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for tab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs Me Fleming has asked you to evaluate costs in the hospitals 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 6. Small glass plates are used in both types of tests. During the post month, the hospital purchased 14,000 plotes ot a cost of $40,880 1800 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. 1800 hours of labor time were recorded in the lab at a cost of $19.260 a 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 Plares: 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 08 hours to completo and each smear should require 040 hours to complete. The average cost of this lob time is $1100 per hout Overhead Overhead cost is based on direct labor hours. The average rate for variable overhead is $690 per hour Required: Compute a materials price variance for the plotes purchased last month and a materials quantity variance for the plates usedlost month 2. For labor cost in the tab a Compute a labor rate variance and a labor efficiency variance b in most hospitals, one-half of the workers in the lob are senior technicians and one-half are assistents. In an effort to reduce costs Volley View Hospital employs only one-fourth senior technicians and three-fourths assistents. Would you recommend that this policy be continued? 3a Compute the variable overhead rate and officiency venonces 3-b. is there any relation between the variable overhead officiency variance and the labor efficiency variance? 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 a Valley View Hospital employs only one fourth senior technicians and three-fourths assistants. Would you rec 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 varianc Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Req 3A Reg 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for th last month. (indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" Cie., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance Real Req 2A > MALUMINIMUM UMU 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 effc Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recomm 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. Reg 1 Req ZA Req 2B Req Req 3B For labor cost in the lab, Compute a labor rate variance and a labor efficiency variance (Indicate the effect of each va by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as values.) Labor rate variance Labor efficiency variance 1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the 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 Valley View Hospital employs only one fourth senior technicians and three-fourths assistants. Would you recommer 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. Req 1 Reg 2A Req 28 Req 3A Req 3B 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 (ie, zero variance). Input all amounts as positive values.) Variable overhead rate variance Variable overhead efficiency variance
