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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 Valloy View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts relmbursed for lab tests, poyments recewed from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has asked you to evaluote costs in the hospitar's lab for the past month. The following information is available: 6. 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. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates of a cost of $56.400 1,500 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, 1,150 hours of labor time were recorded in the lab at a cost of $21,850. d. The lab's vartable overhead cost last month totaled $7,820 Valley View Hospitai has never used standard costs. By searching industry literature, howewor, you have determined the following nationwide avorages for hospital tabs: Piateg: Twe plates aro tequifred per thb lest. These ploies cost 55.00 each and are disposed of after the test is completed Cabor: Each blood test should regule 03 hours to complete, and each smear should require os 5 hours to complete. The averege cost. of this lab time is $20 per hour. Overhead Overhesd cost is based on direct labor hours. The average rate for variable overhead is 56 per hour. Aequired: 1. Compute a materials price varlance for the plates purchased last month and a materials quantiv variance for the plates used isst month. 2. For labor cost in the lab: a. Compute a tabor rate variance and a labor efficiency variance. b. In most hospitats, one-fuif of the workers in the lab are senior techncians and one-haif are assistants in an effort to reduce costs. Valley View Hospital employs only one-fouth senior techniclaris and three-fourths astistants. Would you recommend thot this policy be continued? 3:a Compute the variable overheod rale and efficiency variances. 3 b. is there any retation between the variable overhead efficiency variance and the 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 haif of the workers in the lab are senior technicians and one-half are assistants. in an effort to reduce costs. Valiey View Hospital employs only one-fourth senior techniclans and three-fourths assistants. Would you recommend that this policy be continued? 3-a. Compute the variable overheod rate and efficiency variances. 3-b. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Complete this question by entering your answers in the tabs below. Compute a materials price variance for the plates purchased last month and a materiais quantity variance for the plates used last month. (Indicate the effect of each variance by selecting "F" for favorable, " 0 " for unfavorable, and "None" for no effect (he, zero variance). Input all amounts as positove values.) Complete this question by entering your answers in the tabs below. For labor cost in the lab, compute a labor rate variance and a labor efficiency variance. (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.) Complete this question by entering your answers in the tabs below. Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U+ for unfovorable, and "None" for no effect (i.e., zero vanance). Input all amounts as positive values.)

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