John Fleming, chief administrator for Volley View Hospital, is concerned about the costs for tests in the hospital's lab. Charges for lab

tests are consistently higher ot Volley View then ot other hospitals and hove resulted in many complaints. Also, becouse 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 evaluste costs in the hospital's lab for the post month. The following information is svailable:

a$.$ Two types of tests are performed in the lab$-$blood tests and smears. During the post month, $750$ blood tests ond $3,000$ smears

were performed in the lab.

b$.$ Small glass plates are used in both types of tests. During the post month, the hospital purchased $15,000$ plates at $8$ cost of $$48,450.$

$2,000$ 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 post month, $2,000$ hours of labor time were recorded in the lab at a cost of $$21,600.$

d$.$ The lab's variable overhead cost last month totaled $$15,200.$

Valley View Hospital has never used standard costs. By searching industry literature, however, you hove determined the following

nationwide averoges for hospital labs:

Plotes: Three plates ore required per lab test. These plates cost $$3\mathrm{.}40$ esch ond ore disposed of after the test is completed.

Labor: Each blood test should require $0\mathrm{.}8$ hours to complete, and each smear should require $0\mathrm{.}40$ hours to complete. The average

cost of this lab time is $$11\mathrm{.}20$ per hour.

Overhead: Overhead cost is bssed on direct labor$-$hours. The average rate for variable overhead is $$7\mathrm{.}10$ per hour.

Requlred:

Compute a materials price variance for the plates purchssed last month and a materials quantity voriance for the plates used last

month.

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 ossistants. In on effort to reduce costs,

Valley View Hospitsl employs only one$-$fourth senior technicians and three$-$fourths assistants. Would you recommend that this policy

be continued?

$3-$s$.$ Compute the variable overhesd rate and efficiency variances.

$3.$b$.$ Is there any relation between the variable overhesd efficiency variance ond the lobor efficiency voriance?

Complete this question by entering your answers in the tabs below.

Req $1$

Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used

last month.

Note: 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.