John Fleming. Chief odmtnistrator for Valley Vlew Hospital, is concerned about the costs for tests in the hospital's lab. Charges for Iab tests are consistently higher at Valley View than other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts relmbursed for lab tests, poyments recelved from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming asked you to evaluate costs in the hosprtal's lab for the post month. The following informathon is avallable: a. Two types of tests ore performed in the lab-biood tests and smears. Dung the past month, 400 blood tests and 2,400 smears were performed in the iab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $37.440. 1,400 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, 1,400 hours of labor time were recorded in the lab at a cost of $14,700. d. The lab's variable overhead cost last month totaled $9,800. Valley View Hospital has never used standard costr. By searching industry ifterature, however, you determined the followng navorwide averages for hospltal labs: Plares: Three plotes afe requtred per lab test. These plates cost $3,25 each and are disposed of after the test is completed. Labor: Each blood test should require 0.4 hour to complete. ond each smear should require 0.20 hour to cormplete. The averoge cost of this lob time is $11.40 per hour. Ovemead: Overhead cost is based on direct tabor-hours. The average rate for variable overhead is $6.50 per hour. Required: month. 2. For labor cost in the lab: 2. For labor cost in the lab: a. Compute a tabor rate varnance ond a labor efficlency variance. b. In most hospitals, one-hatf of the workers in the lab are senior technicians and one-haif ore assistants. In an effort to reduce costs. Vatiey View. Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-a. Compute the variable overhead rate and efficiency vaniances. 3-b. Is there amy relation between the variable overhead efficiency variance and the labor efficiency variance? Compure o materials price variance for the plates purcheved last month and a materiala quankity variance for the plates uned last meinth. June certerbution format income atnitment below: rBesed on mochinethours. Ignormal e. Whorked 4,100 eirect inborthours mt is cost of $650 per hour Required: 1. Compute the following variances for June: a Meteriole price mod qunnty variancet b. Libor rate and effielengy vinances. e Vertable overhess rate ond effielency vorences. moner. Complete this question try entering vour answers in the tabs below. Tasman Products has a Maintenance Deportment thot servces equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments based on machine-hours. Data for the Maintenance Deportment foliow: "Budgeted at $24 per mochine-hour. Data for the Forming and Assembly Departments follow: The amount of foued costs in the Maintenance Department is determined by peak-penod requifements. Required: 1. How much Malntenance Department cost should be charged to the Forming Deparment and to the Assernbly Department? 2. How much, if any, of the Maintenance Department's actual costs should be treated as a spending varlance and not charged to the Forming and Assembly departments? Complete this question by entering your answers in the tatus below. Comparative data on three companies in the same service industry are given below. Required: 2. Fill in the missing information. Note: Round the "Turnover" and "ROI" answers to 2 decimal places. "T know headquarters wants us to add that new product line," said Dell Havasi, manager of Ballngs Company's Omice Products Division. "Eut I want to see the numbers before t make a decision. Our division's return on investment (RO) has led the company for three years, and I don't want any letdown." Bimings Company is a decentralized wholesaler with five autonomous divisions, The divisions are evaluated using ROL, with year-end bonuses given so the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for this year are given below The company had an overall return on investment (RO) of 17.00 s this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product requiring $2,326,200 of additional average operating assets. The annual cost and revenue estimates for the new product would be: Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year: 2 Compute the Omice Products Division's margin, turnover, and ROI for the new product by itself 3. Compute the Omice Products Division's margin, turnover, and ROi for next year assuming it performs the same as this year and adds the new product. 4. if you were in Dell Havasi's position, would you accept or feject the new product? 5. Why do you suppose headquarters is anxious for the Oftice Products Division to add the new product? 6. Suppose the company's minimum required rate of return on operating assets is 145 and performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year: b. Compute the Office Products Division's residual income for the new product by itself. c Compute the Office Products Division's residual income for next year assuming it performs the same as this year and adds the new product. d. Using the residual income approach, if you were in Dell Havosin position, would you accept or reject the new product? Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Division's margin, turnover. and ROI for this year. 1. Compute the Office Products Oivision's margin, tumover, and Ror for this year, 2. Compute the Oflice Products Divisipn's margin, turnover, and fior for the never product by itself. 3. Compute the Office Products Division's margin, turnover, and for for nest year astuming it performt the wame as this year and adds the neve product