I'm having a hard time with this one.
1.
Materials price variance | $ 1,890 | F |
Materials quantity variance | $ 8,460 | U |
Materials price variance = Actual quantity purchased x (Actual price - Standard price) = 10500 x ($3.42 - $3.60) = $1890 Favorable
Actual rate = $35910/10500 = $3.42 per plate
Materials quantity variance = Standard price x (Actual quantity used - Standard quantity allowed for actual output) = $3.60 x (9400 – 7050) = $8460 Unfavorable
Actual quantity used = 10500 - 1100 = 9400
Standard quantity allowed for actual output = (250 + 2100) tests x 3 plates per test = 2350 x 3 = 7050 plates
2a.
Labor rate variance | $ 825 | F |
Labor efficiency variance | $ 6,438 | U |
Labor rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 1100 x ($10.35 - $11.10) = $825 Favorable
Actual rate = $11385/1100 hours = $10.35
Labor efficiency variance = Standard rate x (Actual direct labor hours used - Standard direct labor hours allowed for actual output) = $11.10 x (1100 - 520) = $6438 Unfavorable
Standard direct labor hours allowed for actual output = (250 tests x 0.4 hours) + (2100 smears x 0.20 hours) = 100 + 420 = 520 hours
2b. No.
Employing more junior staff in place of senior staff resulted in a reduction in costs leading to a favorable labor rate variance however the efficiency was adversely affected thereby leading to a higher unfavorable labor efficiency variance.
3a.
Variable overhead rate variance | $ 550 | U |
Variable overhead efficiency variance | $ 3,596 | U |
Variable overhead rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 1100 x ($6.70 - $6.20) = $550 Unfavorable
Actual rate = $7370/1100 hours = $6.70
Variable overhead efficiency variance = Variable overhead standard rate x (Actual hours - Standard hours) = $6.20 x (1100 - 520) = $3596 Unfavorable
3b. Yes.
The variable overhead efficiency variance and the labor efficiency variance are both determined by comparing the actual hours used vis-a-vis the standard hours allowed for actual output.
I'm having a hard time with this one. Problem 9-22 Variance Analysis in a Hospital (LO9-4,...
Problem 9-22 Variance Analysis in a Hospital [LO9-4, LO9-5, LO9-6] 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...
Problem 9-22 Variance Analysis in a Hospital [LO9-4, LO9-5, LO9-6] 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...
Problem 9-22 Variance Analysis in a Hospital John Fleming, the 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...
Problem 10-12 Varlance Analysis in a Hospital (LO10-1, LO10-2, LO10-3] 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. 6.25 points Mr....
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 hospitals 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...