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CoursHeroTranscribedText: Problem 5: John Fleming, chief administrator of PAIN Valley Hospital, is concerned about costs for tests in the hospital's lab. Charges for lab tests are consistently higher at PAIN Valley Hospital 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 provide an acceptable level of profit for the lab. Mr. Flemming has asked you to evaluate costs in the hospital's lab for the past month. The following information is available: 0 Basically two types of tests are performed in the lab - blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab 0 Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of Php 28,200. This cost is net of 6% quantity discount. Some 1,500 of these plates were still on hand unused at the end of the month; there were no plates on hand at the beginning of the month. 0 During the past month, 1,150 hours of labor time were recorded in the lab. The cost of this labor time was Php 13,800 0 Variable overhead cost last month in the lab for utilities and supplies totaled Php 7,820. PAIN Valley Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs: Plates: Two plates are required per lab test. These plates cost Php 2.50 each and are disposed of after the test is completed Labor: Each blood test should require 0.30 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is Php 14 per hour. Overhead: Overhead cost is based on direct labor-hours. The average rate for variabie overhead is Php 6 per hour. Mr. Flemming would like a complete analysis for the lab for the last month so that he can get to the root of the Iab's cost problem. Required: 9. Compute the variable overhead spending variance 1o. Compute the overhead variable overhead efficiency variance

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