. |
Two basic types of tests are performed in the lab”smears and blood tests. During the past month, 2,400 smears and 400 blood tests were |
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 $37,440. This cost |
c. |
During the past month, 1,400 hours of labor time were used in performing smears and blood tests. The cost of this labor time was $14,700. |
d. | The lab’s variable overhead cost last month totaled $9,800. |
Cottonwood Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide |
Plates: |
Three plates are required per lab test. These plates cost $3.25 each and are disposed of after the test is completed. |
Labor: |
Each smear should require 0.20 hours to complete, and each blood test should require 0.40 hours to complete. The average cost of this lab time |
Overhead: |
Overhead cost is based on direct labor-hours. The average rate of variable overhead is $6.50 per hour. |
Required: |
1. |
Compute the materials price variance for the plates purchased last month, and compute a materials quantity variance for the plates used last |
Materials price variance | $ | |
Materials quantity variance | $ | |
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2. | For labor cost in the lab: |
a. |
Compute a labor rate variance and a labor efficiency variance. (Input all amounts as positive values. Leave no cells blank |
Labor rate variance | $ | |
Labor efficiency variance | $ | |
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b. |
In most hospitals, three-fourths of the workers in the lab are certified technicians and one-fourth are assistants. In an effort to reduce |
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3a. |
Compute the variable overhead rate and efficiency variances. (Input all amounts as positive values. Leave no cells blank – |
Variable overhead rate variance | $ | |
Variable overhead efficiency variance | $ | |
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3b. |
Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? |
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