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 beer 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. 250 blood tests and 2,100 smears . were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 10.500 plates at a cost of $35.910. 1.100 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, 1,100 hours of labor time were recorded in the lab at a cost of $11,385 d. The lab's variable overhead cost last month totaled $7,370. 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 $3.60 each and are disposed of after the test is completed. Labor: Each blood test should require 0.4 hours to complete, and each smear should require 0.20 hours to complete. The average cost of this lab time is $11.10 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.20 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. Rea 1 Req 2A Req 28 Reg 3A Reg 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (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.) Materials price variance Materials quantity variance For labor cost in the lab, Compute a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i... zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance 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? Yes No 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.) Variable overhead rate variance Variable overhead efficiency variance Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Yes ONO Join 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 govemmental units have not bee: high enough to cover lab costs. Me 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. 250 blood tests and 2,100 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month. the hospital purchased 10.500 plates at a cost of $36.910. 1.100 of these plates were unused at the end of the month plates were on hand st the beginning of the month cDuring the past month 1100 hours of labor time were recorded in the lab at a cost of S1386 d. The lab's variable overhead cost last month totaled $7,370. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following Telluride everages for hulle Plares. Three plates are required per lab test. These plates COOL $3.60 each and are disposed of after the test is completed Labor Each blood test should require D 4 hours to complete, and each smear should require 0.20 hours to complete. The sverage cost of this labilme $11.10 per hour. Overhead Overhead cost is based on direct laborhours. The average rate for variable overhead is C 20 per hour. Required: 1. Computea materials price variance for the plates purchased last month and a materials quantity variance for the plates used ast month 2 For labor cost in the lab. a. Compute o labor rote variance and a labor ciciency vonance. b. In most hospitals, one-half o' the workers in the lao are senior technicians and one-half are assistants. In an effort to reduce costs, , Valley View Hospital empays 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 abor efficiency variance? Complete this question by entering your answers in the tabs below. Reg 1 Reg 24 Rec 28 RSG 3A F. 3B Computea materials price variance for the plate purchased last month and a materials quantity variance for the plates used I set month. (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 positive values.) Materials pnce variance Materiais quantity variance Fur labor cost in the leb. Compute a laburrale variance and a labor efficiency valiente (Indicate the elect of each variance hy plecting '' for fuvarable. "' for an varahl, wad "Nar"for no effect (i... en variance). Input all.mnunte sportive value) Labor mate vanance Lewen In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistant: In an effort to reduce costs, Valley View Hospital employs only one fourth senior techricians and three fouths assistants. Would you recommend that the policy w centime? Ores NO Compute the variable overhead rate and afficiency variancas. (Indicate the effec: cf each variance by selecting "F" for favorable, for unfavorable, and "Nonc' for no effect (i.c. zoro variance). Input all amounts as positive values.) Vrh are ve Variable overhead ettoendy venance Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Yes ON