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Variance calculation

1. Prepare report showing budgeted and actual costs for patients. Show variances. Working with spending variances and efficiency variance.

Medical assistants
1580 patients
$14.00 per hour standard wage -- each asst. expected to spend 30 minutes w/ patient
Assistants total 840 hours @ average pay rate of $15.50

Answer here is $11,060 and $13,060

Cost of clinic supplies used is budgeted at $12.00 per labor hour.
Actual cost of supplies was $9150

Lab tests
Each patient is anticipated to have 3 lab test - average budgeted cost of $65.00 per test.
Actual lab test for June cost $$318,054 and averaged 3.3 per patient.

2. By performing a detailed analysis, determine the spending and efficiency variance for lab tests.

HINT - in applying overhead variance formulas, think of the number of tests as analogous to the number of hours

Also - think of the cost per test as analogous to the variable overhead rate.

3. Compare lab test variance computed in answer (1) flexible budget variance with the sum of the variances in answer (3).

Solution Summary

The solution explains how to calculate the required variances.