Question

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 20X1 are: Normal Cesarean Direct materials (lbs.) 9.0 21 Nursing labor (hrs.) 2.5 5 The standard price paid per pound of direct materials is $10.00. The standard rate for labor is $16.00. Overhead is applied on the basis of direct labor hours. The variable overhead rate for maternity is $30.00 per hour, and the fixed overhead rate is $40.00 per hour. Actual operating data for 20X1 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. Required: 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. Prepare a standard cost sheet showing the unit cost per delivery for each type of patient. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Round costs to two decimal places3. Compute the labor rate and efficiency variances for each type of patient.Standard price, standard usage,standard cost.

Answer 1

			Direct	Cesarean
		UOM
	Direct Material	Lb	9	21
	Nursing Labor	hr	2.5	5
	Standard price / material	$	10	10
	Standard price / labor	$	16	16
	var overhead/hr	$	30	30
	Fix overhead/hr	$	40	40
	Total material cost/patient	$	90	210
	Total labor cost/ Patient	$	40	80
	Variable OH	$	75	150
	Fixed OH	$	100	200
Standard cost	Total Cost/Patient	$	305	640
	Actual operation	Nos	4000	8000
	Direct Material to consume	lb	36000	168000
	Actual Material Consumed	lb	35000	165000
Usage	Variance	Lb	1000	3000
	Price per material	$	9.5	9.5
	Actual price paid for material ($9.5*material consumed)	$	332500	1567500
	Standard price recovered ($10*material to be consumed)	$	360000	1680000
Material	Variance		27500	112500
	Actual Nursing labor	hr	10200	40500
	Should be nursing hour as per standard hour		10000	40000
Labor hour	Variance	Hr	200	500
	Labor cost (Std price/labor*labor hr)	$	163200	648000
	Total Should be labor cost	$	811200
	Actual Labor cost	$	580350
Labor rate	variance	$	230850