Longview Hospital performs blood tests in its laboratory. The following standard

Question

Longview Hospital performs blood tests in its laboratory. The following standards have been set for each blood test performed:

During May, the laboratory performed 1,500 blood tests. On May 1 there were no direct materials (plates) on hand; after a plate is used for a blood test it is discarded. Variable overhead is assigned to blood tests on the basis of standard direct labor-hours. The following events occurred during May:

• 3,600 plates were purchased for $9,540
• 3,200 plates were used for blood tests
• 340 actual direct labor-hours were worked at a cost of $5,550

The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for May is:

Standard Quantity or Hours 2.0 plates 0.2 hours 0.2 hours Standard Price or Rate $2.75 per plate $15.00 per hour $7.00 per hour Direct labor Variable overhead

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials        3,000.00           2.75            8,250.00        3,600.00            2.65            9,540.00 Labour            300.00    15.0000            4,500.00            340.00          16.32            5,550.00 Overhead            300.00           7.00            2,100.00            340.00 Actual output        1,500.00 Materials reqd(1500*2)        3,000.00 Labour hrs reqd(1500*.2)            300.00 Labour Rate Variance DLRV= (SR-AR)AH DLRV= (15-16.32)340 DLRV= 450 U DMPV = (SP-AP)*AQ DMQV= (SQ-AQ)SP { On the basis of Qty used) DLEV = (SH-AH)SR VORV = (SR-AR)AH VOEV = (SH-AH)SR

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