Valley View Hospital has an outpatient clinic. Jeffrey Harper, the hospital’s ch
ID: 2459934 • Letter: V
Question
Valley View Hospital has an outpatient clinic. Jeffrey Harper, the hospital’s chief administrator, is very concerned about cost control and has asked that performance reports be prepared that compare budgeted and actual amounts for medical assistants, clinic supplies, and lab tests. Past financial studies have shown that the cost of clinic supplies used is driven by the number of medical assistant labor hours worked, whereas lab tests are highly correlated with the number of patients served.
Lab tests: Actual lab tests for June cost $363,825 and averaged 3.5 per patient. Each patient is anticipated to have three lab tests, at an average budgeted cost of $71 per test.
Medical assistants: Valley View’s standard wage rate is $14 per hour, and each assistant is expected to spend 30 minutes with a patient. Assistants totaled 870 hours in helping the 1,650 patients seen, at an average pay rate of $15.80 per hour.
Clinic supplies: The cost of clinic supplies used is budgeted at $12 per labor hour, and the actual cost of supplies used was $9,500.
Prepare a report that shows budgeted and actual costs for the 1,650 patients served during June. Compute the differences (variances) between these amounts and label them as favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations.)
On the basis of your answer to requirement (1), does it appear that Valley View Hospital has any significant problems with respect to clinic supplies and lab tests?
Valley View Hospital has an outpatient clinic. Jeffrey Harper, the hospital’s chief administrator, is very concerned about cost control and has asked that performance reports be prepared that compare budgeted and actual amounts for medical assistants, clinic supplies, and lab tests. Past financial studies have shown that the cost of clinic supplies used is driven by the number of medical assistant labor hours worked, whereas lab tests are highly correlated with the number of patients served.
The following information is available for June: Budget 1,650 Patients 1,650 Patients Actual: Variance Medical assistants Clinic supplies Lab tests TotalExplanation / Answer
Valley View hospital Deatails Budget Actual Variance 1650 paitents 1650 paitents Amt $ F/U Medical Assistants 11,550 13,746 2,196 U Clinic Supplies 9,900 9,500 400 F Lab Tests 351,450 363,825 12,375 U Total 372,900 387,071 14,171 U For clinical supplied there is no problem as the variance is favorable. However there is concern for Lab Tests as there is huge unfavorable variance of $12375 and the hospital needs to look into the matter immediately
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