John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 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 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 lab-blood tests and smears. During the past month, 750 blood tests and 3,000 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 15,000 plates at a cost of $48,450. 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, 2,000 hours of labor time were recorded in the lab at a cost of $21,600. d. The lab's variable overhead cost last month totaled $15,200. Valley View Hospital has never used standard costs. By searching industry literature, however, you determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.40 each and are disposed of after the test is completed. Labor: Each blood test should require 0.8 hour to complete, and each smear should require 0.40 hour to complete. The average cost of this lab time is $11.20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.10 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. 2. For labor cost in the lab: a. Compute a labor rate variance and a labor efficiency 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 this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3A Required 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. Note: Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Materials price variance Materials quantity vanance Required 2A > 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 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 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 lab-blood tests and smears. During the past month, 750 blood tests and 3,000 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 15,000 plates at a cost of $48,450. 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, 2,000 hours of labor time were recorded in the lab at a cost of $21,600. d. The lab's variable overhead cost last month totaled $15,200. Valley View Hospital has never used standard costs. By searching industry literature, however, you determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.40 each and are disposed of after the test is completed. Labor: Each blood test should require 0.8 hour to complete, and each smear should require 0.40 hour to complete. The average cost of this lab time is $11.20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.10 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. 2. For labor cost in the lab: a. Compute a labor rate variance and a labor efficiency 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 this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3A Required 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. Note: Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Materials price variance Materials quantity vanance Required 2A >
Expert Answer:
Answer rating: 100% (QA)
1 Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month Materials Pr... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
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 other...
-
Which is NOT likely retaliation by a manager? excluding an employee who reported harassment at a holiday party from future social events. changing the shift of an employee who reported harassment
-
A payment to a credit supplier for 65 has been posted as DR Bank 65, CR Payables 65 (+ CR Supplier account 65). What is the journal to correct this? DEBIT/CREDIT VALUE 130 130 DEBIT Payables CREDIT...
-
Is there more to marketing than building product and brand awareness than what people discuss? How do marketing managers and executives manage consistent messaging across cultures?
-
A marketing research firm is conducting a study to determine if there is a relationship between an individuals age and the individuals preferred source of news. The research firm asked 1,000...
-
Refer to Figure 8.18. Given: H1 = 6 m D = 3 m H2 = 1.5 m D1 = 6 m Draw a flow net. Calculate the seepage loss per meter length of the sheet pile (at a right angle to the cross section shown)....
-
The internal rate of return of the investment proposal presented in question 2 is: a. 8 percent b. 10 percent c. 12 percent d Less than 8 percent
-
Statement of cash flows (indirect method).The net changes in the balance sheet accounts of Keating Corporation for the year 2011 are shown below. 1. On January 2, 2011 short-term investments...
-
1) Find the equation of the line passing through (2,9) and (5,21) slope-intercept form. Write the answer in
-
Approximate the critical numbers of the function shown in the graph and determine whether the function has a relative maximum, a relative minimum, an absolute maximum, an absolute minimum, or none of...
-
Assume the following information: Direct materials $ 70,000 Direct labor $ 46,000 Variable manufacturing overhead $ 10,000 Fixed manufacturing overhead 25,000 Total manufacturing overhead $...
-
4. Lancaster Company had earnings net of tax but before extraordinary items of $500,000. They had an extraordinary loss net of tax of $200,000. Lancaster had a weighted average number of shares of...
-
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production ( not on the basis of raw materials purchased). Its...
-
Prepare the journal entry for each of the following transactions. Firm Body Corporation sells 12,000 shares of $10 par common stock for $13 per share. Firm Body Corporation sells 5,000 shares of $50...
-
Scenario 5: Jim is driving down the freeway when he spills his bag of Skittles onto the front passenger floor. Not wanting to lose a single sugary morsel, Jim leans down to retrieve the handful of...
-
This week, we covered brain areas and neural indicators of learning. We also covered chemical effects on the brain, including prescription drugs and recreational drugs. One drug that is rising in...
-
At Glass Company, materials are added at the beginning of the process and conversion costs are added uniformly. Work in process, beginning: Number of units Transferred - in costs Direct materials...
-
What are the key elements of working capital?
-
From the extracts of data provided below for Easy Events, calculate the ratios the following ratios and explain what they reveal. a) ROCE b) Asset utilisation c) Net profit percentage d) Gross profit...
-
Name the three working capital policies a business can follow.
Study smarter with the SolutionInn App