Problem 10-32 Comprehensive Variance Analysis in a Hospital [LO2, LO3, LO4, LO5, LO6] Marc Goudreau, odministrator of Clearwater Hospital was puzzled by the prior month's reperts. "Every month, it's anyone's guess whether the lab will show a profit or a loss. Perhaps the only answer is to increase our lab fees again" "We can't" replied Rhoda Groves, the controller. "There are still a lot of complaints about the last increase, particularly from the insurance companies, and government heaith units. They/re now paying only about 80% of what we bill. I"m beginning to think the problem is on the cost side: To determine if the Clearwater lab costs are in line with those of other hospital labs, Goudreau has asked you to evaluate the costs for the past month. Groves has provided you with the following information: a. Two basic types of tests are performed in the lab-smears and blood tests. During the past month, 2,700 smears and 900 blood tests were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 16.000 plates at a cost of 538,400 . This cost is net of a 4% purchose discount. A total of 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 past month, 1,800 hours of labour time were used in performing smears and blood tests. The cost of this labour time was \$18.450. d. The lab's variable overhead cost last month totalled $11,700 e. Fixed overhead cost last month totalled $10,400. Clearwater Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $2.50 each and are disposed of after the test is conpleted. Labourz Each smear should require 0.3 hours to conplete, and each blood test shoutd require 0.6 bours to conplete. The average cost of this lab time is $12 per hour. Overheadtoverhead cost is based on direct labour-bours. The average rate of variable overhead is $6 per hour. The average rate of fixed overhead is $8 per hour. These rates are based on a denoninator activity level of 1,250 hours per month. Required: 1. Compute the materials price variance for the plates purchased last month, and compute a materials quantity variance for the plates used last month. findlicate the effect of each varlance by selecting "F" for favorable, " U " for unfavorable, and "None" for no effect (0.e.. xero varlance)) 2t. Tus pert dire question an not part of your Coecect atwonnere