Longview Hospital performs blood tests in its laboratory. The following standards have been set for each blood test performed: Standard quantity or hoursStandard price or Rate
Direct materials2.0 plates$2.75 per plate
Direct labor0.2 hours$15.00 per hour
Variable manufacturing overhead0.2 hours$7.00 per hour
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.

56/75.The materials price variance for May is: A. $360 F B. $360 U C. $740 F D. $740 U

57/76.The materials quantity variance for May is: A. $1,650 F B. $1,650 U C. $550 U D. $720 F

58/77.The labor rate variance for May is: A. $225 F B. $225 U C. $450 F D. $450 U

59/78.The labor efficiency variance for May is: A. $600 F B. $600 U C. $515 U D. $515 F

60/79.The variable overhead efficiency variance for May is A. $350 F B. $350 U C. $280 U D. $280 F

Instructions are below.

Explanation:

Giving the following information:

Standard:

Direct materials 2.0 plates $2.75 per plate

Direct labor 0.2 hours $15.00 per hour

Variable manufacturing overhead 0.2 hours $7.00 per hour

Actual:

1,500 blood tests.

3,600 plates were purchased for $9,540

3,200 plates were used for blood tests

340 actual direct labor-hours were worked for $5,550

1)The materials price variance:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (2.75 - 2.65)*3,600= $360 favorable

2) The materials quantity variance:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (2*1,500 - 3,200)*2.75

Direct material quantity variance= $550 unfavorable

3) The labor rate variance:

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (15 - 16.32)*340= $448.8 unfavorable

4) The labor efficiency variance:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (1,500*0.2 - 340)*15

Direct labor time (efficiency) variance= $600 unfavorable

5) The variable overhead efficiency variance:

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Variable overhead efficiency variance= (1,500*0.2 - 340)*7

Variable overhead efficiency variance= $280 unfavorable

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