The emergency room at Wayland General Hospital uses a flexible budget based on patients seen as the measure of activity. The hospital must maintain an adequate staff of attending and on-call physicians at all times so patient activity does not affect physician scheduling. Nurse scheduling varies as volume changes, however. A standard of 0.5 nurse hours per patient visit was set. Hourly pay for nurses ranges from $9 to $18 per hour, and the average pay rate is $13 per hour. The hospital considers all materials to be supplies, a part of overhead; there are no direct materials. A statistical study showed that the cost of supplies and other variable overhead is more closely associated with nurse-hours than with patient visits. The standard for supplies and other variable overhead is $9 per nurse hour. The head physician of the emergency room unit, Brad Sevigny, is responsible for control of costs. During October the emergency room unit treated 4, 100 patients The budget and actual costs were as follows: (Click the icon to view the budget and actual costs.) Read the requirements. . X Requirements 1 . Calculate price and quantity variances for nursing costs. Begin by calculating the price variance. First enter the formula, then compute the variance. Be sure to label the variance as favorable (F) or unfavorable (U). 2 . Calculate spending and efficiency variances for supplies and other variable overhead. Nursing 3. The hospital's chief administrator has asked Dr. Sevigny to explain the Actual cost Actual hours Standard price ) = price variance variances. Provide possible explanations. $ 28,976 2,115 x $ 13 $ 1,481 U Calculate the quantity variance for nursing costs. First enter the formula, then compute the variance. Be sure to label the variance as favorable (F) or unfavorable (U). Nursing hours Print Done Actual hours Standard hours allowed )X Standard price quantity variance 2,115 2,050 ) x $ 13.00 $ 845 Requirement 2. Calculate spending and efficiency variances for supplies and other variable overhead. Begin by calculating the efficiency variance. First enter the formula, then compute the variance. Be sure to label the variance as favorable (F) or unfavorable (U). Supplies and VOH Actual hours Standard hours allowed ) x Variable overhead rate = efficiency variance 2,115 2,050 x $ 9.00 585 U Calculate the spending variance for supplies and other variable overhead. First enter the formula, then compute the variance. Be sure to label the variance as favorable (F) or unfavorable (U). Supplies and VOH Actual variable overhead Actual hours Variable overhead rate ) = spending variance $ 18,850 2,115 9 ) = 185 F Requirement 3. The hospital's chief administrator has asked Dr. Sevigny to explain the variances. Provide possible explanations. The nursing price and usage variances are unfavorable . This may be due to inefficient scheduling. More nurses are being used than are required according to the flexible budget, and a higher proportion than is normal are in the high wage rate categories. It appears that Dr. Sevigny has controlled supplies and other variable costs quite well . Of the $1,300 unfavorable static budget variance, $900 is an activity variance due to added volume . An additional unfavorable variance is due to the use of extra nursing hours The favorable spending variance for supplies and other variable overhead shows that spending is $ less than expected