The Flynn Insurance Company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as simple or complex. The standard time for processing was: Simple clain Complex claim 60 minutes 3 hours Employees were expected to be productive 8 hours per day. Compensation costs were $93 per day per employee. During November, which had 20 working days, the following number of claims were processed: Simple claims Complex claims 3,150 processed 690 processed Required: a. Calculate the number of workers that should have been available to process November claims. Note: Do not round intermediate calculations. b. Assume that 37 workers were actually available throughout the month of November. Calculate a labor efficiency variance expressed as both a number of workers and a dollar amount for the month. Note: Round "Efficiency variance, in number of workers" to nearest whole number. Use the rounded number in subsequent calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). a. Number of workers b. Efficiency variance, in number of workers c. Efficiency variance, in dollar amount
The Flynn Insurance Company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as simple or complex. The standard time for processing was: Simple clain Complex claim 60 minutes 3 hours Employees were expected to be productive 8 hours per day. Compensation costs were $93 per day per employee. During November, which had 20 working days, the following number of claims were processed: Simple claims Complex claims 3,150 processed 690 processed Required: a. Calculate the number of workers that should have been available to process November claims. Note: Do not round intermediate calculations. b. Assume that 37 workers were actually available throughout the month of November. Calculate a labor efficiency variance expressed as both a number of workers and a dollar amount for the month. Note: Round "Efficiency variance, in number of workers" to nearest whole number. Use the rounded number in subsequent calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). a. Number of workers b. Efficiency variance, in number of workers c. Efficiency variance, in dollar amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ab. 138.
Transcribed Image Text:The Flynn Insurance Company developed standard times for processing claims. When a claim was received at the
processing center, it was first reviewed and classified as simple or complex. The standard time for processing was:
Simple claim
Complex claim
60 minutes
3 hours
Employees were expected to be productive 8 hours per day. Compensation costs were $93 per day per employee. During
November, which had 20 working days, the following number of claims were processed:
Simple claims
Complex claims
3,150 processed
690 processed
Required:
a. Calculate the number of workers that should have been available to process November claims.
Note: Do not round intermediate calculations.
b. Assume that 37 workers were actually available throughout the month of November. Calculate a labor efficiency variance
expressed as both a number of workers and a dollar amount for the month.
Note: Round "Efficiency variance, in number of workers" to nearest whole number. Use the rounded number in
subsequent calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and
"None" for no effect (i.e., zero variance).
a. Number of workers
b. Efficiency variance, in number of workers
c. Efficiency variance, in dollar amount
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