John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6656809467de4_04466568094613a0.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66568094b8ccb_04466568094b19b4.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66568095165a2_045665680950d7d6.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6656809559ae6_0456656809554705.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665680960e839_045665680958ba84.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66568096b040e_0466656809652149.jpg)
Transcribed Image Text:
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 Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough 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, 300 blood tests and 2,200 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 11,000 plates at a cost of $29,260. 1,200 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, 1,200 hours of labor time were recorded in the lab at a cost of $12,480. d. The lab's variable overhead cost last month totaled $8,160. 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 $2.80 each and are disposed of after the test is completed. Labor: Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.30 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? 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 Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough 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, 300 blood tests and 2,200 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 11,000 plates at a cost of $29,260. 1,200 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, 1,200 hours of labor time were recorded in the lab at a cost of $12,480. d. The lab's variable overhead cost last month totaled $8,160. 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 $2.80 each and are disposed of after the test is completed. Labor: Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.30 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?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Explain in words why new common stock that is raised externally has a higher percentage cost than equity that is raised internally by reinvesting earnings. During the last few years, Harry Davis...
-
The following information pertains to the standard costs and actual activity for Repine Company for September: There were no beginning direct materials inventories. Required a. Determine the...
-
A chemical company manufactures three chemicals: A, B, and C. These chemicals are produced via two production processes: 1 and 2. Running process 1 for an hour costs $400 and yields 300 units of A,...
-
The total production cost is $156,000. The prime cost is $90,000. Beginning work-in-process inventory is $60,000. The cost of finished goods is $125,000. How much does manufacturing overhead (CIF)...
-
Zapacab is a competitive response to Uber's on demand ride services in South Africa, but has examples in the U.S. as well. What, if any, are differences between Uber-like ride services and Zapacab?...
-
An organization requires all candidates for a specific position to fill out a personality assessment instrument as part of the application process. What best explains why they would have candidates...
-
Evaluate tan (4) without using a calculator Evaluate 4 sec (20) - 4 tan (20) without using a calculator Evaluate cos(30) sin(60) without using a calculator Find the amplitude of f(x) = 9 sin (3x+)...
-
You are the Financial Manager of C&C Corporation and are evaluating to launch a new product that requires an initial cash outlay of $220,000 to purchase a new machine. It is expected to generate net...
-
Review and research this Guard RFID product technology. Real-Time Visibility of Your Staff, Patients, and Assets - GuardRFIDA Real-Time Location System (RTLS) is a precise positioning system that can...
-
Fedex and UPS Documentary YouTubeLinks to an external site. Please Post Your Detailed Answers to the Following Questions: 1. What are the shipping performance measures of Fedex and UPS? 2. What...
-
1. Write the reason why you chose the topic? 2. Describe the background and relevance of the topic Part II Scope of the Management Information System (200 words) 7 marks The focus of discussion: 1....
-
Refer to Exhibit 4-4. Give the amounts of the following withrespect to the cost of goods available for sale: (1) Prime costs, (2) Conversion costs, (3) Factory overhead, and (4) Indirect...
-
A company uses an absorption cost system. Prepare headings for two columns: (1) assembly department costs, and (2) products assembled. Fill in the two columns for each of the costs below. If a...
-
Review Exhibit 4-5. Assume that the Slider Company had no beginning inventories. The following transactions occurred in 2006 (in thousands): Prepare an analysis similar to Exhibit 4-5. What are the...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App