Baker Street Animal Clinic uses a particular serum routinely in its vaccination program. Veterinarian technicians give the injections. The standard dose is 10cc per injection, and the cost has been $100 per 1,000cc. According to records, 2,000 injections were administered last month at a serum cost of $2,270. The veterinarian noted that the serum for the injections should have cost $2,000 [($0.10 per cc) X (10cc per injection) X (2,000 injections)]. Moreover, she noted some carelessness in handling the serum that could easily lead to unnecessary waste. When this issue was brought to the attention of the technicians, together with the $270 discrepancy in costs, they claimed that the $270 excess costs must be due to the inflated prices charged by the veterinarian supply company. Purchasing records reveal that the price for the serum used last month had indeed increased to $105 per 1,000cc.
A. Provide variance calculations to help you evaluate the technicians’ argument.
B. Discuss whether a significant waste of serum occurred last month. Include quantitative and qualitative information in your discussion.
C. If you were the manager for the Baker Street Animal Clinic, how would you use the results of your analyses in parts (A) and (B)? Explain.