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Variance Analysis in a Hospital

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Variance Analysis in a Hospital. See attached file for full problem description.

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The posting has solution to problem 10-13 relating to variance analysis for Valley View Hospital

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Valley View Hospital.

1. Compute a materials price variance for the plates purchased last month and a material quantity variance for the plates used last month.

Material Price Variance = (Actual Price - Standard Price) X Actual Quantity
Actual Price = 28,200/12,000 = 2.35
Standard Price = 2.50
Actual Quantity = 12,000
Material Price Variance = (2.35-2.50) X 12,000 = $1,800 favorable
Material Quantity Variance = (Actual Quantity - Standard Quantity at Actual Production) X Standard Price
Actual Quantity used = 12,000-1,500=10,500
Standard Quantity = (1,800+2,400) X 2 = 8,400
Standard Price = 2.50
Quantity Variance = (10,500-8,400) X 2.50 = $5,250 ...

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