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:
• 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
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