Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed: During May,the laboratory performed 1,500 blood tests.On May 1 there were no direct materials (plates)on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3,600 plates were purchased for $9,540
• 3,200 plates were used for blood tests
• 340 actual direct labor-hours were worked at a cost of $5,550
The direct materials purchases variance is computed when the materials are purchased.
The variable overhead efficiency variance for May is:

Question

Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed:  During May,the laboratory performed 1,500 blood tests.On May 1 there were no direct materials (plates)on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3,600 plates were purchased for $9,540
• 3,200 plates were used for blood tests
• 340 actual direct labor-hours were worked at a cost of $5,550
The direct materials purchases variance is computed when the materials are purchased.
The variable overhead efficiency variance for May is:

Quizplus · Accepted Answer

SH = 1,500 units × 0.2 hours per unit = 300 hours
Variable overhead efficiency variance = (AH − SH)× SR
= (340 hours − 300 hours)× $7.00 per hour
= (40 hours)× $7.00 per hour
= $280 U

Longview Hospital Performs Blood Tests in Its Laboratory