John Fleming, chief administrator at Valley View Hospital, is concerned about the costs of testing at the hospital's laboratory. Charges for laboratory tests are consistently higher at Valley View than at other hospitals and have resulted in many complaints. In addition, due to strict regulations on the amounts reimbursed for laboratory tests, payments received from insurance companies and government units have not been high enough to cover laboratory costs. Mr. Fleming has asked you to assess the costs in the hospital laboratory for the last month. 

The following information is available: 

a. Two types of tests are performed in the laboratory: blood tests and smears. 

During the last month, 1,300 blood tests and 4. 000 smears.

 b. Small glass slides are used in both types of tests. 

During the past month, the hospital purchased 20,000 plates at a cost of $79,800. 3,000 of these plates were unused at the end of the month; there were no dishes available at the beginning of the month. 

C. During the past month, 3,000 hours of labor time were logged in the lab at a cost of $33,900. 

d. The lab's variable overhead cost last month was $25,800. Valley View Hospital has never used standard charges. However, by searching industry literature, he has determined the following national averages for hospital laboratories: 

Plates: Three plates are required per laboratory test. These plates are $4.20 each and are thrown away once the test is complete. 

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 $12.20 per hour. 

Overhead: Overhead is based on direct labor hours. The average variable overhead rate is $8.10 per hour.

Required

1. Calculate a material price variance for the plates purchased last month and a material quantity variance for the plates used last month.

2. For cost of labor in the laboratory: a. Compute a labor rate variance and a labor efficiency variance

3. Variable overhead cost rate and efficiency variances.

Answer rating: 100% (QA)

Material Price Variance for Plates Actual Cost of Plates Purchased 79800 Actual Quantity of Plates Purchased 20000 plates Standard Price per Plate 420 ... View the full answer