Mr. Fleming asked you to evaluate costs in the hospital's lab for the past month. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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, 1,800 blood tests and 2,400 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $56,400. 1,500 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, 1,150 hours of labor time were recorded in the lab at a cost of $21,850. d. The lab's variable overhead cost last month totaled $7,820. Valley View Hospital never used standard costs. By searching industry literature, however, you determined the following nationwide averages for hospital labs: Plates: Two plates are required per lab test. These plates cost $5.00 each and are disposed of after the test is completed. Labor: Each blood test should require 0.3 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is $20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6 per hour. Required: W 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? Explain. 3. Compute the variable overhead rate and efficiency variances. Is there any relation between the variable 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, 1,800 blood tests and 2,400 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $56,400. 1,500 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, 1,150 hours of labor time were recorded in the lab at a cost of $21,850. d. The lab's variable overhead cost last month totaled $7,820. Valley View Hospital never used standard costs. By searching industry literature, however, you determined the following nationwide averages for hospital labs: Plates: Two plates are required per lab test. These plates cost $5.00 each and are disposed of after the test is completed. Labor: Each blood test should require 0.3 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is $20 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6 per hour. Required: W 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? Explain. 3. Compute the variable overhead rate and efficiency variances. Is there any relation between the variable
Expert Answer:
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...
-
Two control charts are used when the dimension of interest is a variable like weight, thickness, length, or time. These two charts are: p-chart and c-chart Range chart and p-chart Mean chart and...
-
An adverse market delivery charge rate depends on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio is the ratio of amount borrowed to appraised...
-
A voltage V is applied to a dc electric motor. The armature winding resistance is equal to R. At what value of current flowing through the winding will the useful power of the motor be the highest?...
-
Of the cans produced by a company, 96% do not have a puncture, 93% do not have a smashed edge, and 89.3% do not have a puncture and do not have a smashed edge. Find the probability that a randomly...
-
Susan owns a valuable diamond ring that has been in her family for generations. She is told by an appraiser that the ring has a current market value of $50,000. She feels that the ring is adequately...
-
Classify each of the following as a problem or a symptom. If it is a symptom, give two examples of a possible underlying problem. If it is a problem, give two examples of a possible symptom that may...
-
Refer to the data for Gore Range Carpet Cleaning in Problem 8-21. Required: 1. Using Exhibit 8A1 as a guide, prepare the first-stage allocation of costs to the activity cost pools. 2. Using Exhibit...
-
Find the solution to the recurrence relation: T(n) 6T(n-1)-8T(n-2) = with base condition: T(0) = 2 and T(1) = 3
-
ABZ Inc. has 8% coupon bond on the market with 12 years tomaturity. The bond makes quarterly payments and currently sells for106% of par (par is $1,000). Calculate the yield to maturity andthe curr 2...
-
Gangnam Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if Cost of Goods Sold is P107,000; the ending balance of Finished Goods Inventory is P20,000;...
-
SHORT ANSWER QUESTIONS (Enter your answers on the ANSWER SHEET). 7) Briefly explain what is the Payback period. 4pts 4pts 8) Briefly explain what is an Opportunity Cost. 9) Should you always refuse...
-
Find the curvature of the curve (t) = (-1-5 cost, - 4,3 +5 sin t) at the point t 7 = . 12
-
Define: T: PR by What is the kernel of 7? T(P) = p(x)dx.
-
Emily is buying a new table for $1700. The dealer is charging her an annual interest rate of 10.7%. If she pays off the loan in 36 months, what are her monthly payments? If she makes a down payment...
-
Describe and evaluate the elements of the carrying cost of inventory and how it relates to inventory levels and capital investment. How does ABC inventory stratification affect the carrying cost...
-
Kenneth Hubbard has prepared the following list of statements about managerial accounting and financial accounting. 1. Financial accounting focuses on providing information to internal users. 2....
-
What are the two drawbacks to Modigliani and Millers 1963 theory?
-
Describe the tax breaks for debt financing and for equity financing.
-
According to the new approach by Modigliani and Miller (1963), how does the value of a levered company differ from the value of an unlevered company?
Study smarter with the SolutionInn App