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Clearwater hospital has never used standard costs. By searching industry literature how ever you have determined the following nationwide averages for hospital labs Plates: three plates are required pear lab test these plates cost 2.50 each and are disposed of after the test is completed. Labor: each smear should require 0.3 to complete and each blood test require 0.6 hours to complete the average cost of this lab time is $12 per hour Overhead: overhead cost is based on direct labor hours the average rate of variable overhead is $6 per hour the average rate of fixed overhead is $8 per hour the rates are based a denominator activity level of 1250 per hour month Required: 1- Compute the material price variance for the plates purchased last month and compute materials quantity variance for plates used last month (indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable and None for no effect zero variance: Materials Price Variance • Material Quantity variance • Labor rate variance • Labor efficiency variance • Variable overhead spending variance • Variable overhead efficiency variance • Fixed overhead budget variance • Fixed overhead volume variance

Clearwater hospital has never used standard costs. By searching industry literature how ever you have determined the following nationwide averages for hospital labs Plates: three plates are required pear lab test these plates cost 2.50 each and are disposed of after the test is completed. Labor: each smear should require 0.3 to complete and each blood test require 0.6 hours to complete the average cost of this lab time is $12 per hour Overhead: overhead cost is based on direct labor hours the average rate of variable overhead is $6 per hour the average rate of fixed overhead is $8 per hour the rates are based a denominator activity level of 1250 per hour month Required: 1- Compute the material price variance for the plates purchased last month and compute materials quantity variance for plates used last month (indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable and None for no effect zero variance: Materials Price Variance • Material Quantity variance • Labor rate variance • Labor efficiency variance • Variable overhead spending variance • Variable overhead efficiency variance • Fixed overhead budget variance • Fixed overhead volume variance

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
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Clearwater hospital has never used standard costs. By searching industry literature how ever you have determined the following nationwide averages for hospital labs Plates: three plates are required pear lab test these plates cost 2.50 each and are disposed of after the test is completed. Labor: each smear should require 0.3 to complete and each blood test require 0.6 hours to complete the average cost of this lab time is $12 per hour Overhead: overhead cost is based on direct labor hours the average rate of variable overhead is $6 per hour the average rate of fixed overhead is $8 per hour the rates are based a denominator activity level of 1250 per hour month Required: 1- Compute the material price variance for the plates purchased last month and compute materials quantity variance for plates used last month (indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable and None for no effect zero variance: Materials Price Variance Material Quantity variance Labor rate variance Labor efficiency variance • Variable overhead spending variance • Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance
Transcribed Image Text:Clearwater hospital has never used standard costs. By searching industry literature how ever you have determined the following nationwide averages for hospital labs Plates: three plates are required pear lab test these plates cost 2.50 each and are disposed of after the test is completed. Labor: each smear should require 0.3 to complete and each blood test require 0.6 hours to complete the average cost of this lab time is $12 per hour Overhead: overhead cost is based on direct labor hours the average rate of variable overhead is $6 per hour the average rate of fixed overhead is $8 per hour the rates are based a denominator activity level of 1250 per hour month Required: 1- Compute the material price variance for the plates purchased last month and compute materials quantity variance for plates used last month (indicate the effect of each variance by selecting "F" for favorable "U" for unfavorable and None for no effect zero variance: Materials Price Variance Material Quantity variance Labor rate variance Labor efficiency variance • Variable overhead spending variance • Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance
Marc Goudreau Administrator of clearwater hospital was puzzled by the prior month report every month it is anyone guess whether the tab will show a profit or loss perhaps the only answer is to increase our lab fees again. We cant replied Rhoda Groves the controller there are still a lot of complaint about last increase particularly from the insurance company and government health units they are now paying only about 80% of what we bill I am beginning to think the problem is on the cost side To determine if the clearwater lab costs are in the line with those are other hospital lab Goudreau has asked you to evaluate the costs for the past month Glove has provided you with the following information • Two basic type of tests are performed in the Lab Smears and blood test during the past month 2,700 smears and 900 Blood test were performed in the Lab Small Glass plates are used in both type of tests during the past month the hospital purchased 16,000 plates of cost of 38,400 this cost is net of 4% purchase discount a total of 2,000 of these plates were unused at the end of the month no plates were on hand at the beginning of the month. During the past month 1,800 hours of labor time were used in performing smear and blood tests the cost of this labor time was 18,450 The Lab's variable overhead cost last month totaled 11,700 Fixed overhead cost last month totaled 10,400
Transcribed Image Text:Marc Goudreau Administrator of clearwater hospital was puzzled by the prior month report every month it is anyone guess whether the tab will show a profit or loss perhaps the only answer is to increase our lab fees again. We cant replied Rhoda Groves the controller there are still a lot of complaint about last increase particularly from the insurance company and government health units they are now paying only about 80% of what we bill I am beginning to think the problem is on the cost side To determine if the clearwater lab costs are in the line with those are other hospital lab Goudreau has asked you to evaluate the costs for the past month Glove has provided you with the following information • Two basic type of tests are performed in the Lab Smears and blood test during the past month 2,700 smears and 900 Blood test were performed in the Lab Small Glass plates are used in both type of tests during the past month the hospital purchased 16,000 plates of cost of 38,400 this cost is net of 4% purchase discount a total of 2,000 of these plates were unused at the end of the month no plates were on hand at the beginning of the month. During the past month 1,800 hours of labor time were used in performing smear and blood tests the cost of this labor time was 18,450 The Lab's variable overhead cost last month totaled 11,700 Fixed overhead cost last month totaled 10,400
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