Longview Hospital Performs Blood Tests in Its Laboratory

question 75

Multiple Choice

Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed: During May, the laboratory performed 1, 500 blood tests.On May 1 there were no direct materials (plates) on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3, 600 plates were purchased for $9, 540
• 3, 200 plates were used for blood tests
• 340 actual direct labor-hours were worked at a cost of $5, 550
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for May is:

• A)$360 F
• B)$360 U
• C)$740 F
• D)$740 U

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Definitions:

Ending Inventory

The overall worth of products on hand for sales at the closure of an accounting cycle.

Inventory Items

Specific objects or products that are part of a company's inventory, available for sale or used in production.

Gross Profit

The difference between revenue and the cost of goods sold (COGS), indicating the profit made from sales before deducting operating expenses.

Beginning Inventory

The initial value of goods available for sale at the start of an accounting period.