1.
Materials price variance | $ 4,200 | F |
Materials quantity variance | $ 4,620 | U |
Materials price variance = Actual quantity purchased x (Actual price - Standard price) = 20000 x ($3.99 - $4.20) = $4200 Favorable
Actual rate = $79800/20000 = $3.99 per plate
Materials quantity variance = Standard price x (Actual quantity used - Standard quantity allowed for actual output) = $4.20 x (17000 – 15900) = $4620 Unfavorable
Actual quantity used = 20000 - 3000 = 17000
Standard quantity allowed for actual output = (1300 + 4000) tests x 3 plates per test = 5300 x 3 = 15900 plates
2a.
Labor rate variance | $ 2,700 | F |
Labor efficiency variance | $ 4,392 | U |
Labor rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 3000 x ($11.30 - $12.20) = $2700 Favorable
Actual rate = $33900/3000 hours = $11.30
Labor efficiency variance = Standard rate x (Actual direct labor hours used - Standard direct labor hours allowed for actual output) = $12.20 x (3000 - 2640) = $4392 Unfavorable
Standard direct labor hours allowed for actual output = (1300 tests x 0.8 hours) + (4000 tests x 0.40 hours) = 1040 + 1600 = 2640 hours
2b. NO
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 | $ 1,500 | U |
Variable overhead efficiency variance | $ 2,916 | U |
Variable overhead rate variance = Actual direct labor hours x (Actual rate - Standard rate) = 3000 x ($8.60 - $8.10) = $1500 Unfavorable
Actual rate = $25800/3000 hours = $8.60
Variable overhead efficiency variance = Variable overhead standard rate x (Actual hours - Standard hours) = $8.10 x (3000 - 2640) = $2916 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...