Direct Labor Variances Moran Health Care Is a Large Hospital System Outside Chicago

Essay

Direct Labor Variances
Moran Health Care is a large hospital system outside Chicago that offers both hospital (inpatient) and clinic (outpatient) services. It has a centralized admissions office that admits and registers clients, some of whom are seeking inpatient hospital services and others outpatient services. Moran uses a standard cost system to control its labor costs. The standard labor time to admit an inpatient is 15 minutes. Outpatient admissions have a standard labor time of 9 minutes. The standard wage rate for admissions agents is $14.50 per hour. During the last week, the admissions office admitted 820 inpatients and 2,210 out-patients. Actual hours worked by the admissions agents last week were 540 hours, and their total wages paid were $8,235.
Required:
a. Prepare a financial report that summarizes the operating performance (including the efficiency) of the admissions office for last week.
b. Based on the financial report you prepared in (a), write a short memo summarizing your findings and conclusions from this report.