Concept explainers
Standards for nonmanufacturing expenses
The Radiology Department provides imaging services for Northeast Washington Medical Center. One important activity in the Radiology Department is transcribing digitally recorded analyses of images into a written report. The manager of the Radiology Department determined that the average transcriptionist could type 800 lines of a report in an hour. The plan for the first week in July called for 64,000 typed lines to be written. The Radiology Department has two transcriptionists. Each transcriptionist is hired from an employment firm (hat requires temporary employees to be hired for a minimum of a 40-hour week. Transcriptionists are paid $18.00 per hour. The manager offered a bonus if the department could type more than 70,000 lines for the week, without overtime. Due to high service demands, the transcriptionists typed more lines in the first week of July than planned. The actual amount of lines typed in (he first week of July was 70,400 lines, without overtime. As a result, the bonus caused the average transcriptionist hourly rate to increase to $20.00 per hour during the first week in July.
Instructions
Are there any performance-related issues that the labor time and rate variances fail to consider? Explain.
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Chapter 13 Solutions
Survey of Accounting (Accounting I)
- One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of one letter per second. The letter is mechanically sorted from a three-digit code input by an operator sitting at a keyboard. The manager of the mechanical sorting operation wants to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 32,364,000 pieces of mail in December, due to the upcoming holiday season. Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 145 hours in the month. a. How many temporary employees should the manager hire for December?fill in the blank 1 employees b. If each temporary employee earns a standard $20 per hour, what would be the labor time variance if the actual number of additional letters sorted in December was…arrow_forwardOne of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of one letter per second. The letter is mechanically sorted from a three-digit code input by an operator sitting at a keyboard. The manager of the mechanical sorting operation wants to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 23,850,000 pieces of mail in December, due to the upcoming holiday season. Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 125 hours in the month.arrow_forwardMonica Lee, Administrative Director of Digital Imaging Center, has been asked by the practice members to see if it is feasible to add a technologist aide to support the practice's mammography service. The center currently has two digital mammography units, two technologists and one technologist aide. She has complied the following information: Reimbursement per mammogram: $140 Equipment lease per month per machine: $12,000 Equipment maintenance cost per month per machine: $9,000 Technologist cost per mammogram: $35 Technologist aide cost per mammogram: $20 Variable cost per mammogram: 13 a: What is the patient volume Digital Imaging needs per month to cover fixed and variable costs and to make a $20,000 profit to cover other practice costs[x]?arrow_forward
- Foto-Fast Copy Shop provides a variety of photocopying and printing services. On June 5, the owner invested in some computer-aided photography equipment that enables customers to reproduce a picture or illustration, input it digitally into the computer, enter text into the computer, and then print out a four-color professional quality brochure. Prior to the purchase of this equipment, Foto-Fast Copy Shop’s overhead averaged $37,500 per year. After the installation of the new equipment, the total overhead increased to $90,000 per year. Foto-Fast Copy Shop has always costed jobs on the basis of actual materials and labor plus overhead assigned using apredetermined overhead rate based on direct labor hours. Budgeted direct labor hours for theyear are 7,500, and the wage rate is $8 per hour.Required:1. What was the predetermined overhead rate prior to the purchase of the new equipment?2. What was the predetermined overhead rate after the new equipment was purchased?3. Suppose Rick Anselm…arrow_forwardHealth Cooperative is an outpatient surgical clinic. It budgets $829,900 of overhead cost for the year. The two main surgical units and their data follow. Service General surgery Orthopedic surgery 1. Compute a single plantwide rate, assuming the company allocates overhead cost based on 860 budgeted surgeries. 2. In May of this year, the company performed 33 general surgeries and 27 orthopedic surgeries. Allocate overhead to each of the two types of surgeries for May using the single plantwide overhead rate. Budgeted Surgeries 530 330 Complete this question by entering your answers in the tabs below. Required 1 Required 2 In May of this year, the company performed 33 general surgeries and 27 orthopedic surgeries. Allocate overhead to each of the two types of surgeries for May using the single plantwide overhead rate. General surgery Orthopedic surgery Plantwide Overhead Rate Number of Surgeries Allocated Costarrow_forwardThe Barberton Municipal division of Road Maintenance is charged with road repair in the city of Barberton and the surrounding area. Cindy Kramer, road maintenance director, must submit a staffing plan for the next year based on a set schedule for repairs and on the city budget. Kramer estimates that the labor hours required for the next four quarters are 6,000, 12,000, 20,000, and 10,000, respectively. Each of the 11 workers on the workforce can contribute 500 hours per quarter. Payroll costs are $6,000 in wages per worker for regular time worked up to 500 hours, with an overtime pay rate of $17 for each overtime hour. Overtime is limited to 20 percent of the regular-time capacity in any quarter. Although unused overtime capacity has no cost, unused regular time is paid at $12 per hour. The cost of hiring a worker is $3,600, and the cost of laying off a worker is $1,400. Subcontracting is not permitted. (Hint: When calculating the number of workers, make sure to round up to…arrow_forward
- The Dahlia Medical Center has 35 labor rooms, 19 combination labor and delivery rooms, and 3 delivery rooms. All of these facilities operate around the clock. Time spent in labor rooms varies from hours to days, with an average of about a day. The average uncomplicated dellvery requires about one hour in the delivery room. The average time in a combination labor-delivery room is about 24 hours. During an exceptionally busy three-day period, 101 healthy bables were born at Dahlia Medical Center. 51 bables were born in separate labor and delivery rooms and 50 were bom in combined labor and delivery rooms. Which of the facilities (labor rooms, combination labor and delivery rooms, or dellvery rooms) had the greatest utilization rate? The combination labor and delivery rooms had the highest utilization rate of%. (Enter your response as a percent rounded to two decimal places.)arrow_forwardNovello Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies $162,300 Depreciation expense 29,300 Utilities 17,000 Nurse salaries 243,700 Technician wages 79,700 Total operating room overhead $532,000 The overhead costs will be assigned to procedures based on the number of surgical room hours. Novello Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Compute the estimated number of operating room hours for the year. hours b. Determine the predetermined operating room overhead rate…arrow_forwardThe Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $17 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $246,800 Benefits 56,100 Supplies 29,900 Office expenses 37,400 Office depreciation 33,700 Computer depreciation 22,400 Total $426,300 The department expects to lay out 22,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the department's function were purchased from the outside. a. Prepare a differential analysis dated February 22 to determine whether TAG-D should layout pages internally…arrow_forward
- Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be:Disposable supplies$281,800Depreciation expense50,800Utilities29,600Nurse salaries423,200Technician wages138,600Total operating room overhead$924,000The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs.a. Determine the predetermined operating room overhead rate for the year.$ per hour b. Bill Harris had a 8-hour procedure on January 22. How much…arrow_forwardResource Supply and Usage, Special Order, Relevancy Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $22,100 and is capable of processing as many as 6,150 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,150 orders per year. The cost of each PC system is $1,300 per year. In addition to the salaries, Elliott spends $26,568 for forms, postage, and other supplies (assuming 24,600 purchase orders are processed). During the year, 24,000 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: purchase orders…arrow_forwardResource Supply and Usage, Special Order, Relevancy Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $22,900 and is capable of processing as many as 6,950 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,950 orders per year. The cost of each PC system is $1,300 per year. In addition to the salaries, Elliott spends $30,024 for forms, postage, and other supplies (assuming 27,800 purchase orders are processed). During the year, 27,200 orders were processed Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Which of the resources associated with purchasing can be classified as committed resources? 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: purchase orders Activity usage: purchase orders Unused activity: purchase…arrow_forward
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