# Variance Analysis

akaato

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

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:

For Routine Services Nursing:

• 20,000 hours 120%  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 hours 120%  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

• 8 years ago
• 5