A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are: Short term Long term Direct Material (lbs 9 21 Nursing labor (hrs.) 2.5 5 Standard price paid for direct materials (per lb.): $ 10.00 Standard rate for labor (per hour): $ 16.00 Variable overhead rate for ICU (per hour): $ 30.00 Fixed overhead rate for ICU (per hour): $ 40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000 Total long-term patients: 8000 Direct materials for short-term patients (in lbs.): 35,000 @ $9.50 Direct materials for long-term patients (in lbs.): 165,000 @ $9.50 Nursing labor for short-term patients (in hours): 10,200 Nursing labor for long-term patients (in hours): 40,500 Total nursing labor hours (both types of patients): 50,700 Total cost of Labor (includes both types of patients): $580,350 Standard cost sheet -Short term patients Standard Price Standard Usage Standard Cost Direct Materials $10 9 $ 90 Direct Labor $16 2.5 $40 Variable overhead $30 2.5 $75 Fixed overhead $40 2.5 $100 Total standard unit cost $305 1. Compute the LRV for the short- term patients and state whether its favorable or not. Explain what could have caused the variance to occur. What is behind the difference that is causing it to occur
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A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:
Short term Long term Direct Material (lbs 9 21 Nursing labor (hrs.) 2.5 5 |
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Standard price paid for direct materials (per lb.): |
$ 10.00 |
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Standard rate for labor (per hour): |
$ 16.00 |
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Variable |
$ 30.00 |
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Fixed overhead rate for ICU (per hour): |
$ 40.00 |
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**VOH and FOH are applied (used) on the basis of direct labor hours |
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Actual operating data for 2011 is as follows: |
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Total short-term patients: |
4,000 |
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Total long-term patients: |
8000 |
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Direct materials for short-term patients (in lbs.): |
35,000 |
@ $9.50 |
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Direct materials for long-term patients (in lbs.): |
165,000 |
@ $9.50 |
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Nursing labor for short-term patients (in hours): |
10,200 |
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Nursing labor for long-term patients (in hours): |
40,500 |
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Total nursing labor hours (both types of patients): |
50,700 |
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Total cost of Labor (includes both types of patients): |
$580,350 |
Standard Price Standard Usage Standard Cost
Direct Materials $10 9 $ 90
Direct Labor $16 2.5 $40
Variable overhead $30 2.5 $75
Fixed overhead $40 2.5 $100
Total standard unit cost $305
1. Compute the LRV for the short- term patients and state whether its favorable or not. Explain what could have caused the variance to occur. What is behind the difference that is causing it to occur
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