Prepare a three-level volume forecast as a first step in their decision-making.
HSA 525 CH. 17 AND 18
Assignment Exercise 17-1: Variance Analysis Greenview Hospitaloperated at 120% of normal capacity in twoof its departments duringthe year. It operated 120% times 20,000 normal capacity directlabor nursing hours in rou- tine services and it operated 120%times 20,000 normal capacity equipment hours in the laboratory. Thelab allocates overhead by measuring minutes and hours the equipmentis used; thus equipment hours. Assumptions: For Routine ServicesNursing: • 20,000 hours X 120% = 24,000 direct labor nursing hours.• Budgeted Overhead at 24,000 hours = $42,000 fixed plus $6,000variable = $48,000 total. • Actual Overhead at 24,000hours =$42,000fixed plus $7,000variable = $49,000 total. • AppliedOverhead for 24,000 hours at $2.35 = $56,400. For Laboratory: •20,000 hours X 120% = 24,000 equipment hours. • Budgeted Overheadat 24,000 hours = $59,600 fixed plus $11,400variable = $71,000total. • Actual Overhead at 24,000 hours = $59,600 fixed plus$11,600 variable = $71,200 total. • Applied Overhead for 24,000hours at $3.455 = $82,920. Required 1. Set up aworksheet forapplied overhead costsand volume variance with a column for RoutineServices Nursing and a second column for Laboratory. 2. Set up aworksheet for actual overhead costs and budget variance with acolumn for Routine Services Nursing and a second column forLaboratory.
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