Unit Costs, Multiple Products, Variance Analysis, Service Setting The maternity wing of the city hospital has two types of patients: normal and cesarean. The standard quantities of labor and materials per delivery for 2011 are:
The standard price paid per pound of direct materials is $10. The standard rate for labor is $16. Overhead is applied on the basis of direct labor hours. The variable overhead rate for maternity is $30 per hour, and the fixed overhead rate is $40 per hour. Actual operating data for 2011 are as follows:
a. Deliveries produced: normal, 4,000; cesarean, 8,000.
b. Direct materials purchased and used: 200,000 pounds at $9.50—35,000 for normal maternity patients and 165,000 for the cesarean patients; no beginning or ending raw materials inventories.
c. Nursing labor: 50,700 hours—10,200 hours for normal patients and 40,500 hours for the cesarean; total cost of labor, $580,350.
1. Prepare a standard cost sheet showing the unit cost per delivery for each type of patient.
2. Compute the materials price and usage variances for each type of patient.
3. Compute the labor rate and efficiency variances.
4. Conceptual Connection: Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total materials usage and labor efficiency variances? Explain.
5. Conceptual Connection: Standard costing concepts have been applied in the healthcare industry. For example, diagnostic-related groups (DRGs) are used for prospective payments for Medicare patients. Select a search engine (such as Yahoo! or Google), and conduct a search to see what information you can obtain about DRGs. You might try ‘‘Medicare DRGs’’ as a possible search topic. Write a memo that answers the following questions:
a. What is a DRG?
b. How are DRGs established?
c. How many DRGs are used?
d. How does the DRG concept relate to standard costing concepts discussed in the chapter? Can hospitals use DRGs to control their costs? Explain.
GeographyBecause of the forces caused by its rotation, Earth is an oblate ellipsoid rather than a sphere. The equatorial radius is 3963 miles and the polar radius is 3950...Aug 07 2021
A solution of formic acid (HCOOH, Ka 5 1.8 x 10-4) has a pH of 2.70. Calculate the initial concentration of formic acid in this solution.Jul 06 2021
The price of gold is currently $600 per ounce. The forward price for delivery in one year is $800. An arbitrageur can borrow money at 10% per annum. What should the arbit...Apr 17 2020
What happens to the amperage draw of a condensing unit on a split AC system if the liquid line is restricted?Jun 11 2021
Differentiate between an ordinary annuity and an annuity due. How is the future value of an ordinary annuity calculated, and how (for the same cash flows) can it be conve...Apr 01 2020
What type of market do Australian Banks operate in?Australian Banks are in a competitive type ofmarketHow has the GlobalFinancial Crisis affected competition in this mark...Apr 29 2020
Change your model for to use a fork truck (45 feet/minute) for of parts in the system. Assume that the parts arrive at an incoming dock and exit at a second dock. Assume...Aug 05 2020
The firm “Company Dew” traditionally provided only those benefits and services, which were necessary for the employees, such as, compensation due to work-related injury ...Apr 03 2021
Gleam Clean cleans and waxes floors for commercial customers. The company is presently working at less than capacity with equipment and employees at times idle. The compa...May 10 2020
Implied-in-law contracts are not actually contracts but are to help prevent unjust enrichment.true or falseApr 28 2021