Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company's customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @$1.00 per tube) $2.00 Direct labor (1 hour @ $32 per hour) 32.00 Variable overhead (1 hour @ $6.00 per hour) 6.00 Fixed overhead (1 hour @ $13.00 per hour) 13.00 Total standard cost per test $53.00 The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activity for the month of November 2020, when 1,400 tests were conducted, resulted in the following. Direct materials (2,940 test tubes) $2,646 Direct labor (1,442 hours) 44,702 Variable overhead 8,512 Fixed overhead 16,968 Monthly budgeted fixed overhead is $17,030. Revenues for the month were $93,800, and selling and administrative expenses wer $4,600. Compute the price and quantity variances for direct materials and direct labor. Materials price variance 24 Materials quantity variance 24 Labor price variance 24 Labor quantity variance 24 Compute the total overhead variance. >
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company's customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @$1.00 per tube) $2.00 Direct labor (1 hour @ $32 per hour) 32.00 Variable overhead (1 hour @ $6.00 per hour) 6.00 Fixed overhead (1 hour @ $13.00 per hour) 13.00 Total standard cost per test $53.00 The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activity for the month of November 2020, when 1,400 tests were conducted, resulted in the following. Direct materials (2,940 test tubes) $2,646 Direct labor (1,442 hours) 44,702 Variable overhead 8,512 Fixed overhead 16,968 Monthly budgeted fixed overhead is $17,030. Revenues for the month were $93,800, and selling and administrative expenses wer $4,600. Compute the price and quantity variances for direct materials and direct labor. Materials price variance 24 Materials quantity variance 24 Labor price variance 24 Labor quantity variance 24 Compute the total overhead variance. >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:HART LABS, INC.
Income Statement
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Transcribed Image Text:Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the
company's customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and
control its testing costs. Shown below are the standard costs for a typical test.
Direct materials (2 test tubes @ $1.00 per tube)
$2.00
Direct labor (1 hour @ $32 per hour)
32.00
Variable overhead (1 hour @ $6.00 per hour)
6.00
Fixed overhead (1 hour @ $13.00 per hour)
13.00
Total standard cost per test
$53.00
The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual
activity for the month of November 2020, when 1,400 tests were conducted, resulted in the following.
Direct materials (2,940 test tubes)
$2,646
Direct labor (1,442 hours)
44,702
Variable overhead
8,512
Fixed overhead
16,968
Monthly budgeted fixed overhead is $17,030. Revenues for the month were $93,800, and selling and administrative expenses were
$4,600.
Compute the price and quantity variances for direct materials and direct labor.
Materials price variance
24
Materials quantity variance
2$
Labor price variance
2$
Labor quantity variance
2$
Compute the total overhead variance.
Total Overhead variance
24
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