The Alabama Hospital performs testing in its laboratory. The following standards have been set for each test performed: Direct materials: 2 gallons at $3 per gallon Direct labor: 0.5 hours at $8 per hour Variable overhead: 0.5 hours at $2 per hour During May, the hospital performed 4,000 tests. On May 1 there were no direct materials on hand. Variable overhead is assigned to tests on the basis of direct labor hours. The following events occurred during May: Direct materials purchased: 8,100 gallons at $3.10 per gallon Direct materials used: 7,600 gallons Direct labor used: 2,200 hours at $8.25 per hour Actual variable overhead: $4,175 The hospital applies variable overhead to products on the basis of standard direct labor-hours. The materials quantity variance for May was: $1,200 U $1,200 F $300 U $1,500 F
The Alabama Hospital performs testing in its laboratory. The following standards have been set for each test performed: Direct materials: 2 gallons at $3 per gallon Direct labor: 0.5 hours at $8 per hour Variable overhead: 0.5 hours at $2 per hour During May, the hospital performed 4,000 tests. On May 1 there were no direct materials on hand. Variable overhead is assigned to tests on the basis of direct labor hours. The following events occurred during May: Direct materials purchased: 8,100 gallons at $3.10 per gallon Direct materials used: 7,600 gallons Direct labor used: 2,200 hours at $8.25 per hour Actual variable overhead: $4,175 The hospital applies variable overhead to products on the basis of standard direct labor-hours. The materials quantity variance for May was: $1,200 U $1,200 F $300 U $1,500 F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:The Alabama Hospital performs testing in its laboratory. The following standards have been set for each test performed:
Direct materials: 2 gallons at $3 per gallon
Direct labor: 0.5 hours at $8 per hour
Variable overhead: 0.5 hours at $2 per hour
During May, the hospital performed 4,000 tests. On May 1 there were no direct materials on hand. Variable overhead is assigned to tests
on the basis of direct labor hours. The following events occurred during May:
Direct materials purchased: 8,100 gallons at $3.10 per gallon
Direct materials used: 7,600 gallons
Direct labor used: 2,200 hours at $8.25 per hour
Actual variable overhead: $4,175
The hospital applies variable overhead to products on the basis of standard direct labor-hours.
The materials quantity variance for May was:
$1,200 U
$1,200 F
$300 U
O $1,500 F
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