Question

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 @ $1.50 per tube) $3.00 Direct labor (1 hour @ $32 per hour) 32.00 Variable overhead (1 hour @ $6.00 per hour) 6.00 Fixed overhead (1 hour @ $12.00 per hour) 12.00 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 2017, when 1,300 tests were conducted, resulted in the following: Direct materials (2,678 test tubes) $3,722 Direct labor (1,365 hours) 40,950 Variable overhead 7,488 Fixed overhead 14,872 Monthly budgeted fixed overhead is $16,320. Revenues for the month were $85,800, and selling and administrative expenses were $4,600. Collapse question part (a) Compute the price and quantity variances for direct materials and direct labor. (Round answers to 0 decimal places, e.g. 5,275.) Materials price variance $ Materials quantity variance $ Labor price variance $ Labor quantity variance $ Click if you would like to Show Work for this question: Open Show Work Link to Text Link to Text Link to Text Attempts: 0 of 3 used Save for later Submit Answer Expand question part (b) The parts of this question must be completed in order. This part will be available when you complete the part above. Expand question part (c) The parts of this question must be completed in order. This part will be available when you complete the part above.

Answer 1

Material
Std qty allowed (1300*2)	2600
Std price per unit		1.5
Actual qty used		2678
Actual material cost		3722
Material price variance = Actual qy purchased *Std price - Actual Material cost
		2678 *1.50 - 3722 = 295 Fav
Material Qty variance = Std price (Std qty allowed - Actual qty used)
		1.50 (2600-2678 ) = 117 unfav
Labor
Std hours allowed (1300*1.00)	1300
Std rate per hour		32
Actual hours wroked		1365
Actual rate		30
Labor rate variance = Actual hours (Std rate - Actual rate)
		1365 (32-30) = 2730 Fav
Labor efficiency variance = Std rate (Std hours -Actual hours )
		32 (1300-1365) = 2080 unfav