# Variance Analysis 1 answer below »

Greenview Hospital operated at 120% of normal capacity in two of its departments during

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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:

20,000 hours120%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 hours120%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.

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