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-Aiso, because of strict regulations on amounts reimbursed for lab tests, poyments received from insurance companies and gowetnmental units have not been high enough to caver lab costs. Mr. Fening has asked you to evaluate costs in the thospitai's lab for the past month. The following infoemation is avallabler a. Two types of tests are performed in the lab-blood tests and smears. During the past month, 350 blood tests and 2,300 smears Wore performed in the lab. b, Smali giass plates are used in both types of tests. During the past month, the hospital purchased 11,500 plates at a cost of $27,025. 1.300 of these plates were unused at the end of the monthi no plates were on hand at the beginning of the monthi c. During the past month, 1,300 hours of labor time were recorded in the lab at a cost of $13,585. d. The lab's variable overtheod cost last month totaled $8,970. Vas ey View Hospital has never used standard costs, By searching industry literature, however, you have determined the following nationwide averages for hospital lab5: Piares: Three plates are required per lab test. These plates cost 52.50 each and are disposed of after the test is completed. Labor: Each blood test should require 0.6 hours to complete, and each smear shouid require 0.30 hours to complete. The average cost of this lab time is 51130 per hour, Overhead: Overhead cost is based on direct labor-hours. The average fate for variable overthead is $6.40 per hour. Required: 1. Compute a materials peice variance for the plates purchased last month and a materials quantify variance for the plates used last misnth. 2. For labor cost in the lab; a. Compute a labor fate variance and a labor efficiency variance. b. In most hospitals, one-half of the workers in the lab are senior technicians and one-haif are assistants. In an elfort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three-fourtlys 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