EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

Question

1,150 hours ($12.00 per hour* – $14.00 per hour) = $2,300 F *$13,800 ÷ 1,150 hours = $12.00 per hour Labor efficiency variance = SR (AH – SH) $14.00 per hour (1,150 hours – 900 hours) = $3,500 U Problem 10-16 (continued)  b. The policy probably should not be continued. Although the hospital is saving $2 per hour by employing more assistants than senior techni-cians, this savings is more than offset by other factors. Too much time is being taken in performing lab tests, as indicated by the large unfavorable labor efficiency variance. And, it seems likely that most (or all) of the hospital’s unfavorable quantity variance for plates is traceable to inadequate supervision of assistants in the lab.

Answer

1,150 hours ($12.00 per hour* – $14.00 per hour) = $2,300 F *$13,800 ÷ 1,150 hours = $12.00 per hour Labor efficiency variance = SR (AH – SH) $14.00 per hour (1,150 hours – 900 hours) = $3,500 U Problem 10-16 (continued)  b. The policy probably should not be continued. Although the hospital is saving $2 per hour by employing more assistants than senior techni-cians, this savings is more than offset by other factors. Too much time is being taken in performing lab tests, as indicated by the large unfavorable labor efficiency variance. And, it seems likely that most (or all) of the hospital’s unfavorable quantity variance for plates is traceable to inadequate supervision of assistants in the lab.

EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

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