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Chapter10Solution

# Chapter10Solution - Excel Templates Chapter 10 Student Name...

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Excel Templates Chapter 10 Student Name: <Type your name here> Class: <Type your class here>

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Problem 10-23 Give Data: COTTONWOOD HOSPITAL Number of smears 2,700 Number of blood tests 900 Number of plates purchased 16,000 Cost of plates \$38,400 Quantity discount allowed 4% Unused plates at month beginning -0- Unused plates at month end 2,000 Labour hours 1,800 Cost of labour hours \$18,450 Variable overhead costs \$11,700 Fixed overhead cost \$10,400 Nationwide averages: Number of plates per test 3 Cost per plate \$2.50 Time for smear (hours) 0.30 Time for blood test (hours) 0.60 Average cost of lab time per hour \$12.00 Variable overhead rate per hour \$6.00 Fixed overhead rate per hour* \$8.00 *Based on denominator activity level o 1,250 hours per month
<Type your name here> <Type your class here> Excel Templates Chapter 10 Problem 10-23 Part 1 Data: Actual Quantity Purchased 16,000 Actual Price \$2.40 Standard Price \$2.50 Actual Quantity Used 14,000 10,800 Materials Price and Quantity Variance \$38,400 \$40,000 \$35,000 \$27,000 Price Variance \$1,600 Favourable Quantity Variance \$8,000 Unfavourable Part 2a Data: Actual Hours of Input 1,800 Actual Rate \$10.25 1,350 Standard Rate \$12.00 Labour Rate and Efficiency Variances \$18,450 \$21,600 \$16,200 Rate Variance \$3,150 Favourable Efficiency Variance \$5,400 Unfavourable Total Variance \$2,250 Unfavourable Part 2b Standard Quantity Allowed for Actual Output Actual Quantity Purchased at Actual Price Actual Quantity Purchased at Standard Price Actual Quantity Used at Standard Price Standard Quantity Allowed for Actual Output at Standard Price Standard Hours Allowed for Actual Output Actual Hours of Input at Actual Rate Actual Hours of Input at Standard Rate Standard Hours Allowed for Actual Output at Standard Rate The policy probably should not be continued. Although the hospital is saving \$1.75 per hour (note the difference between the standard rate per hour and the actual rate) by employing more assistants relative to the number of senior technicians than other hospitals, this savings is more than offset by other factors. Too much time is being taken in performing lab tests, as indicated by the large unfavourable labour efficiency variance. And, it seems likely that most (or all) of the hospital’s unfavourable quantity variance for plates is traceable to inadequate supervision of assistants in the lab.

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Part 3 Data: Actual Hours of Input 1,800 Actual Rate \$6.50 1,350 Standard Rate \$6.00 Variable Overhead Spending and Efficiency Variances \$11,700 \$10,800 \$8,100 Spending Variance \$900 Unfavourable Efficiency Variance \$2,700 Unfavourable Total Variance \$3,600 Unfavourable Is there any relation between the variable overhead efficiency variance and the labour efficiency variance? Explain.
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