Question

In most hospitals, most laboratory workers are certified technicians and a minority are assistants. Obviously, the salary of the former is much higher than that of the assistants. In an effort to reduce costs, a hospital plans to employ only a quarter of the laboratory staff as certified technicians, the rest are assistants. Explain the effect that the hospital's decision may have on the following variations: materials, labor, and indirect costs. Are you in favor or against the plan of the hospital? Explain

Answer 1

Material variance - No impact will be there upon the material variance as there is no such relation with the material of the workers.material variances will be similar inspite of selection or rejection of the plan.

Labor variance - labor cost variance will be favorable if we take upon the plan as the cost will get reduced for sure as per the plan,. Whereas labor efficiency variance will be unfavorable as the efficiency form the technicians will be high as compared to assitants.

Indirect cost variance - this cost will also be a bit unfavorable because accepting this plan will make a change in the cost of expenses upon labor as the cost required by assistants will be high as compared to technicians.

I am gainst the plan cost reduction is the major requiremnt but sacrificing the quality as technicians are the main requiremnt of the hospitals and working with the assistants will reduce the quality of services being provided.