14 Jun Question Greenview Hospital operated
Question
Greenview Hospital operated at 120% of normal capacity in two of its departments during the year. It operated 120% times 20,000 normal capacity direct labor nursing hours in routine services and it operated 120% times 20,000 normal capacity equipment hours in the laboratory. The lab allocates overhead by measuring minutes and hours the equipment is used; thus equipment hours.
Assumptions:
For Routine Services Nursing:
_ 20,000 hours X 120% = 24,000 direct labor nursing hours.
_ Budgeted Overhead at 24,000 hours = $42,000 fixed plus $6,000 variable = $48,000 total.
_ Actual Overhead at 24,000 hours = $42,000 fixed plus $7,000 variable = $49,000 total.
_ Applied Overhead for 24,000 hours at $2.35 = $56,400.
For Laboratory:
_ 20,000 hours X 120% = 24,000 equipment hours.
_ Budgeted Overhead at 24,000 hours = $59,600 fixed plus $11,400 variable = $71,000 total.
_ Actual Overhead at 24,000 hours = $59,600 fixed plus $11,600 variable = $71,200 total.
_ Applied Overhead for 24,000 hours at $3.455 = $82,920.
Questions:
1. Set up a worksheet for applied overhead costs and volume variance with a column for Routine Services Nursing and a second column for Laboratory.
2. Set up a worksheet for actual overhead costs and budget variance with a column for Routine Services Nursing and a second column for Laboratory.
3. Set up a worksheet for volume variance and budget variance totaling net variance with a column for Routine Services Nursing and a second column for Laboratory.
4. Insert input data from Assumptions.
5. Complete computations for all three worksheets.
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