Chapter 23, Problem 2MAD

Admissions time variance

Valley Hospital began using standards to evaluate its Admissions Department. The standard was broken into two types of admissions as follows:

The unscheduled admission took longer because name, address, and insurance information needed to be determined and verified at the time of admission. Information was collected on scheduled admissions prior to admitting the patient, thus requiring less time in admissions.

The Admissions Department employs four full-time people for 40 hours per week at $15 per hour. For the most recent week, the department handled 140 unscheduled and 340 scheduled admissions.

1. a. How much was actually spent on labor for the week?
2. b. What are the standard hours for the actual volume of work for the week?
3. c. Compute the direct labor time variance, and report how well the department performed for the week.
4. d. What are some factors that may cause an unfavorable direct labor time variance for the Admissions Department?