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 @ $1.70 per tube) Direct labor (1 hour @ $32 per hour) Variable overhead (1 hour @ $7.00 per hour) Fixed overhead (1 hour @ $13.00 per hour) Total standard cost per test Direct materials (2,730 test tubes) Direct labor (1,339 hours) Variable overhead Fixed overhead (a) 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 1,300 tests were conducted, resulted in the following. Materials price variance Materials quantity variance Labor price variance Labor quantity variance $ $ $4,368 Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were $3,600. $ 41,509 $ 8,580 Compute the price and quantity variances for direct materials and direct labor. $3.40 16,211 32.00 7.00 13.00 $55.40

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ee.47.

 

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 @ $1.70 per tube)
Direct labor (1 hour @ $32 per hour)
Variable overhead (1 hour @ $7.00 per hour)
Fixed overhead (1 hour @ $13.00 per hour)
Total standard cost per test
Direct materials (2,730 test tubes)
Direct labor (1,339 hours)
Variable overhead
Fixed overhead
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 1,300 tests were conducted, resulted in the following.
(a)
Materials price variance
Materials quantity variance
Labor price variance
Labor quantity variance
$
$
$4,368
Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were
$3,600.
$
41,509
$
8,580
Compute the price and quantity variances for direct materials and direct labor.
$3.40
16,211
32.00
7.00
13.00
$55.40
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 @ $1.70 per tube) Direct labor (1 hour @ $32 per hour) Variable overhead (1 hour @ $7.00 per hour) Fixed overhead (1 hour @ $13.00 per hour) Total standard cost per test Direct materials (2,730 test tubes) Direct labor (1,339 hours) Variable overhead Fixed overhead 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 1,300 tests were conducted, resulted in the following. (a) Materials price variance Materials quantity variance Labor price variance Labor quantity variance $ $ $4,368 Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were $3,600. $ 41,509 $ 8,580 Compute the price and quantity variances for direct materials and direct labor. $3.40 16,211 32.00 7.00 13.00 $55.40
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