John Fleming. chlef administrator for Valley View Hospltal, 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 hospltals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests. payments recelved from Insurance companles and governmental units have not been high enough to cover lab costs. Mr. Fleming has asked you to evaluate costs In the hospltal's lab for the past month. The following information is avallable: a. Two types of tests are performed in the lab-blood tests and smears. During the past month, 1,300 blood tests and 4,000 smears were performed in the lab. b. Small glass plates are used In both types of tests. During the past month, the hospltal purchased 20,000 plates at a cost o $79,800.3,000 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 past month, 3,000 hours of labor time were recorded in the lab at a cost of $33,900. d. The lab's variable overhead cost last month totaled $25,800. Valley View Hospital has never used standard costs. By searching industry Ilterature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $4.20 each and are disposed of after the test is completed. Labor. Each blood test should require 0.8 hours to complete, and each smear should require 0.40 hours to complete. The average cost of this lab time is $1220 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for varlable overhead is $8.10 per hour. Required: 1. Compute a materlals price varlance for the plates purchased last month and a materials quantity varlance for the plates used last month. 2 For labor cost in the lab: a. Compute a labor rate varlance and a labor efficlency varlance b. In most hospitals, one-half of the workers in the lab are senlor techniclans and one-half are assistants. In an effort to reduce costs, Valley VIew Hospital employs only one-fourth senlor techniclans and three-fourths assistants. Would you recommend that this policy be continued? 3-a. Compute the variable overhead rate and efficlency variances. 3-b. Is there any relation between the varlable overhead efficlency varlance and the labor efficlency variance