1.
Materials price variance | $ 3,480 | F |
Materials quantity variance | $ 7,200 | U |
Materials price variance = Actual quantity purchased x (Actual price - Standard price) = 14500 x ($3.76 - $4.00) = $3480 Favorable
Actual rate = $54520/14500 = $3.76 per plate
Materials quantity variance = Standard price x (Actual quantity used - Standard quantity allowed for actual output) = $4.00 x (12600 – 10800) = $7200 Unfavorable
Actual quantity used = 14500 - 1900 = 12600
Standard quantity allowed for actual output = (700 + 2900) tests x 3 plates per test = 3600 x 3 = 10800 plates
2a.
Labor rate variance | $ 665 | F |
Labor efficiency variance | $ 1,998 | U |
Labor rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 1900 x ($10.75 - $11.10) = $665 Favorable
Actual rate = $20425/1900 hours = $10.75
Labor efficiency variance = Standard rate x (Actual direct labor hours used - Standard direct labor hours allowed for actual output) = $11.10 x (1900 - 1720) = $1998 Unfavorable
Standard direct labor hours allowed for actual output = (700 tests x 0.8 hours) + (2900 tests x 0.40 hours) = 560 + 1160 = 1720 hours
2b. No
The policy should not be continued since employing more junior staff in place of senior staff resulted in a reduction in costs leading to a favorable labor rate variance but the efficiency was adversely affected thereby leading to a higher unfavorable labor efficiency variance.
3a.
Variable overhead rate variance | $ 950 | U |
Variable overhead efficiency variance | $ 1,260 | U |
Variable overhead rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 1900 x ($7.50 - $7.00) = $950 Unfavorable
Actual rate = $14250/1900 hours = $7.50
Variable overhead efficiency variance = Variable overhead standard rate x (Actual hours - Standard hours) = $7.00 x (1900 - 1720) = $1260 Unfavorable
3b. Yes
The variable overhead efficiency variance and the labor efficiency variance are both determined on the basis of the direct labor hous and hence both are unfavorable.
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in...
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...
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...
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...
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...
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...
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...
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...
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...
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...
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...