P19-33B Regal Company produces hospital uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Regal reports the following cost data for 2009:
Accounting for manufacturing overhead
Budget
Actual
Machine hours
7,000 hours
6,500 hours
Indirect materials
50,000
52,000
Depreciation on trucks used to deliver uniforms to customers
14,000
12,000
Depreciation on plant and equipment
65,000
67,000
Indirect manufacturing labor
40,000
43,000
Customer service hotline
19,000
21,000
Plant utilities
27,000
20,000
Requirements
1. Compute the predetermined manufacturing overhead rate. (p. 955)
2. Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account. (pp. 957–958)
3. Close the under- or overallocated overhead to Cost of Goods Sold. (pp. 958–959)
4. How can managers use accounting information to help control manufacturing overhead costs? (pp. 955–956)
Click here for the solution: Regal Company produces hospital uniforms
Showing posts with label hospital. Show all posts
Showing posts with label hospital. Show all posts
Tuesday, November 10, 2015
Wednesday, September 23, 2015
I am going to work for a hospital, which is a not-for-profit organization
Exercise 3-16 “I am going to work for a hospital, which is a
not-for-profit organization. Because there are no profits, I will not be
able to apply any CVP analysis in my work.” Do you agree with this
statement? Why or Why not?
Click here for the solution: I am going to work for a hospital, which is a not-for-profit organization
Click here for the solution: I am going to work for a hospital, which is a not-for-profit organization
Saturday, August 15, 2015
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital's lab
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 the past month. The following information is available:
• Two types of tests are performed in the lab-blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. This cost is net of a 6% quantity discount. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month.
• During the past month, 1,150 hours of labor time were recorded in the lab at a cost of $13,800.
• The lab's variable overhead cost last month totaled $7,820.
Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs:
Plates: Two plates are required per lab test. These plates cost $2.50 each and are disposed of after the test is completed.
Labor: Each blood test should require 0.3 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is $14 per hour.
Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6 per hour.
1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month.
2. For labor cost in the lab:
• Compute a labor rate variance and a labor efficiency variance.
• In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? Explain.
3. Compute the variable overhead rate and efficiency variances. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Explain.
Click here for the solution: John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital's lab
Mr. Fleming has asked you to evaluate costs in the hospital's lab for the past month. The following information is available:
• Two types of tests are performed in the lab-blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. This cost is net of a 6% quantity discount. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month.
• During the past month, 1,150 hours of labor time were recorded in the lab at a cost of $13,800.
• The lab's variable overhead cost last month totaled $7,820.
Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs:
Plates: Two plates are required per lab test. These plates cost $2.50 each and are disposed of after the test is completed.
Labor: Each blood test should require 0.3 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is $14 per hour.
Overhead: Overhead cost is based on direct labor-hours. The average rate for variable overhead is $6 per hour.
1. Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month.
2. For labor cost in the lab:
• Compute a labor rate variance and a labor efficiency variance.
• In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants. In an effort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three-fourths assistants. Would you recommend that this policy be continued? Explain.
3. Compute the variable overhead rate and efficiency variances. Is there any relation between the variable overhead efficiency variance and the labor efficiency variance? Explain.
Click here for the solution: John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital's lab
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