Variance Problems: Total Cost Incurred by Organizations
Variance Problems:
1. Last year the price for thermometer covers in a pediatrician’s office was $.05 each. This year, the covers cost $.06 each. If the office purchased 10,000 thermometer covers this year, what is the price variance? Is it favorable or unfavorable?
Price variance = (Present price – Old price) × Present quantity = _____________________ F or U ?
2. Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1,500 hours per month) + (0.50 × RVUs). For the coming month, management expects RVUs to be 5,800. What should budgeted labor for the month be?
Flexible Budget = Hours worked + (0.5 X RVUs) = ________________ Hours
3. Efficiency cost is a term that involves:
A. The amount of time that a problem goes uncorrected
B. Cost per unit of time
C. Probability the problem occurrence is correctable
D. All of the above.
Variance Problems
Name
Course
Instructor
Date
1] Last year the price for thermometer covers in a pediatrician’s office was $.05 each. This year, the covers cost $.06 each. If the office purchased 10,000 thermometer covers this year, what is the price variance? Is it favorable or unfavorable?
Price variance = (Present price – Old price) Γ Present quantity = _ (0.06-0.05)*10,000= 100______U______________ F or U?This is an unfavorable variance since the pediatrician’s office had initially budgeted using the old price of $.05 that then increased by $.01.
2] Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1,500 hours per month) + (0.50 Γ RVUs)...
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