Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has 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, 1,050 blood tests and 3,500 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 17,500 plates at a cost of $58,800. 2,500 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, 2,500 hours of labor time were recorded in the lab at a cost of $27,625. d. The lab's variable overhead cost last month totaled $20,250. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.50 each and are disposed of after the test is completed. Labor; Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.70 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.60 per hour. Required: 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.

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 at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has 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, 1,050 blood tests and 3,500 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 17,500 plates at a cost of $58,800. 2,500 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, 2,500 hours of labor time were recorded in the lab at a cost of $27,625. d. The lab's variable overhead cost last month totaled $20,250. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.50 each and are disposed of after the test is completed. Labor; Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.70 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.60 per hour. Required: 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Please help if you can I know there are a couple parts really appreciate
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 at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has 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, 1,050 blood tests and 3,500 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 17,500 plates at a cost of $58,800. 2,500 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, 2,500 hours of labor time were recorded in the lab at a cost of $27,625. d. The lab's variable overhead cost last month totaled $20,250. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.50 each and are disposed of after the test is completed. Labor; Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.70 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.60 per hour. Required: 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.
Transcribed Image Text: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 at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has 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, 1,050 blood tests and 3,500 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 17,500 plates at a cost of $58,800. 2,500 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, 2,500 hours of labor time were recorded in the lab at a cost of $27,625. d. The lab's variable overhead cost last month totaled $20,250. Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Three plates are required per lab test. These plates cost $3.50 each and are disposed of after the test is completed. Labor; Each blood test should require 0.6 hours to complete, and each smear should require 0.30 hours to complete. The average cost of this lab time is $11.70 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $7.60 per hour. Required: 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.
Required: 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 that this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency varfance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance < Reg 1 Req 2A >
Transcribed Image Text:Required: 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 that this policy be continued? 3-a. Compute the variable overhead rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency varfance? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance < Reg 1 Req 2A >
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Internal Control Components
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS