Please see question 4 attached. Thank you for your help

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 been 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 labblood tests and smears. During the past month, 400 blood tests and 2,400 smears were performed in the lab. 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 costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Labor: Overhead: Three plates are required per lab test. These plates cost $3.25 each and are disposed of after the test is completed. 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 $11.40 per hour. Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6.50 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. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) 2. For labor cost in the lab: a. Compute a labor rate variance and a labor efficiency variance. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero 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? Yes No 3-a. Compute the variable overhead rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Yes No Student's Name Instructor's Name Course Date INTRODUCTION A case is presented of john flaming who is chief administrator for valley view hospital. He is concerned with the cost for tests in the hospital's lab. Charges for lab are much higher in this facility compared to other facilities. Situation that lead to much complain from the facility client. As the government together with the insurance companies doesn't reimburse high enough to cover the elevated cost, the hospital is receiving critics on the same. Evaluation of information regarding the hospital labs is to be done to assist Mr. Fleming in managing the hospital. DISCUSSION Q1 material price variance Material price variance= (Actual quantity*actual price) - (Actual quantity used* standard price) = $37,440- $(10600*3.25) =$(37400- 34450) = $ 2950 Where actual cost= 37, 440 Standard cost of actual quantity= (10600* 3.25) Q1b actual material quantity variance= (material expected to be use- actual material used) = 12000-10600 =1400 plates Q2a labor rate variance= (actual quantity* actual rate) - (actual quantity*standard rate) =$14700- ((0.4+0.2)/2 * $1400* 11.40) =$(14700-4788) = $ 9912 Labor efficient variance= (actual hours- standard hours) * standard rate = (1400- 420)0.3 =294 Q2a. Yes I would recommend that the hospital to employ one-fourth senior technician and threefourths assistant because that would greatly cut down the consistent high cost of lab test Q2b. Variable overhead = (standard direct labor hours allowed- actual direct labor hours)* standard variable overhead rate = (1400- 420) * 6.50 = 6370 Efficiency variance= Actual plate used= 1400 Standard labor hours per unit= 0.3 Standard labor hours allowed= 420 Actual hour used= 1400 Difference= 980 Standard labor variance rate=11.40 Direct labor efficiency variance= 980* 11.40 =11172 Q 2b NO there is no difference between variable overhead efficiency variance and the labor efficiency variance Student's Name Instructor's Name Course Date INTRODUCTION A case is presented of john flaming who is chief administrator for valley view hospital. He is concerned with the cost for tests in the hospital's lab. Charges for lab are much higher in this facility compared to other facilities. Situation that lead to much complain from the facility client. As the government together with the insurance companies doesn't reimburse high enough to cover the elevated cost, the hospital is receiving critics on the same. Evaluation of information regarding the hospital labs is to be done to assist Mr. Fleming in managing the hospital. DISCUSSION Q1 material price variance Material price variance= (Actual quantity*actual price) - (Actual quantity used* standard price) = $37,440- $(10600*3.25) =$(37400- 34450) = $ 2950 Where actual cost= 37, 440 Standard cost of actual quantity= (10600* 3.25) Q1b actual material quantity variance= (material expected to be use- actual material used) = 12000-10600 =1400 plates Q2a labor rate variance= (actual quantity* actual rate) - (actual quantity*standard rate) =$14700- ((0.4+0.2)/2 * $1400* 11.40) =$(14700-4788) = $ 9912 Labor efficient variance= (actual hours- standard hours) * standard rate = (1400- 420)0.3 =294 Q2a. Yes I would recommend that the hospital to employ one-fourth senior technician and threefourths assistant because that would greatly cut down the consistent high cost of lab test Q2b. Variable overhead = (standard direct labor hours allowed- actual direct labor hours)* standard variable overhead rate = (1400- 420) * 6.50 = 6370 Efficiency variance= Actual plate used= 1400 Standard labor hours per unit= 0.3 Standard labor hours allowed= 420 Actual hour used= 1400 Difference= 980 Standard labor variance rate=11.40 Direct labor efficiency variance= 980* 11.40 =11172 Q 2b NO there is no difference between variable overhead efficiency variance and the labor efficiency variance Student's Name Instructor's Name Course Date INTRODUCTION A case is presented of john flaming who is chief administrator for valley view hospital. He is concerned with the cost for tests in the hospital's lab. Charges for lab are much higher in this facility compared to other facilities. Situation that lead to much complain from the facility client. As the government together with the insurance companies doesn't reimburse high enough to cover the elevated cost, the hospital is receiving critics on the same. Evaluation of information regarding the hospital labs is to be done to assist Mr. Fleming in managing the hospital. DISCUSSION Q1 material price variance Material price variance= (Actual quantity*actual price) - (Actual quantity used* standard price) = $37,440- $(10600*3.25) =$(37400- 34450) = $ 2950 Where actual cost= 37, 440 Standard cost of actual quantity= (10600* 3.25) Q1b actual material quantity variance= (material expected to be use- actual material used) = 12000-10600 =1400 plates Q2a labor rate variance= (actual quantity* actual rate) - (actual quantity*standard rate) =$14700- ((0.4+0.2)/2 * $1400* 11.40) =$(14700-4788) = $ 9912 Labor efficient variance= (actual hours- standard hours) * standard rate = (1400- 420)0.3 =294 Q2a. Yes I would recommend that the hospital to employ one-fourth senior technician and threefourths assistant because that would greatly cut down the consistent high cost of lab test Q2b. Variable overhead = (standard direct labor hours allowed- actual direct labor hours)* standard variable overhead rate = (1400- 420) * 6.50 = 6370 Efficiency variance= Actual plate used= 1400 Standard labor hours per unit= 0.3 Standard labor hours allowed= 420 Actual hour used= 1400 Difference= 980 Standard labor variance rate=11.40 Direct labor efficiency variance= 980* 11.40 =11172 Q 2b NO there is no difference between variable overhead efficiency variance and the labor efficiency variance Student's Name Instructor's Name Course Date INTRODUCTION A case is presented of john flaming who is chief administrator for valley view hospital. He is concerned with the cost for tests in the hospital's lab. Charges for lab are much higher in this facility compared to other facilities. Situation that lead to much complain from the facility client. As the government together with the insurance companies doesn't reimburse high enough to cover the elevated cost, the hospital is receiving critics on the same. Evaluation of information regarding the hospital labs is to be done to assist Mr. Fleming in managing the hospital. DISCUSSION Q1 material price variance Material price variance= (Actual quantity*actual price) - (Actual quantity used* standard price) = $37,440- $(10600*3.25) =$(37400- 34450) = $ 2950 Where actual cost= 37, 440 Standard cost of actual quantity= (10600* 3.25) Q1b actual material quantity variance= (material expected to be use- actual material used) = 12000-10600 =1400 plates Q2a labor rate variance= (actual quantity* actual rate) - (actual quantity*standard rate) =$14700- ((0.4+0.2)/2 * $1400* 11.40) =$(14700-4788) = $ 9912 Labor efficient variance= (actual hours- standard hours) * standard rate = (1400- 420)0.3 =294 Q2a. Yes I would recommend that the hospital to employ one-fourth senior technician and threefourths assistant because that would greatly cut down the consistent high cost of lab test Q2b. Variable overhead = (standard direct labor hours allowed- actual direct labor hours)* standard variable overhead rate = (1400- 420) * 6.50 = 6370 Efficiency variance= Actual plate used= 1400 Standard labor hours per unit= 0.3 Standard labor hours allowed= 420 Actual hour used= 1400 Difference= 980 Standard labor variance rate=11.40 Direct labor efficiency variance= 980* 11.40 =11172 Q 2b NO there is no difference between variable overhead efficiency variance and the labor efficiency variance