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. t $3.80 Direct materials (2 test tubes@$1.90 per tube) 31.00 Direct labor (1 hour @ $31 per hour) 7.00 Variable overhead (1 hour @ $7.00 per hour) 12.00 Fixed overhead (1 hour @$12.00 per hour) $53.80 Total standard cost per test 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 $5.292 Direct materials (2,940 test tubes) 42,630 Direct labor (1,470 hours) 8,778 Variable overhead 16,450 Fixed overhead Monthly budgeted fixed overhead is $17,400. Revenues for the month were $93.800, and selling and administrative expenses were $4.000

Answer 1

1) material price variance = $294(favarable)

2) material quantitiy variance = $ - 266(unfavarable)

3)labour price varance = $2940(favarable)

4) labour quantity varicance = -$2170(unfavarable)
Material price varience: Actual Standard price Actual 1x Price Quantity 2940 [1.70 - 940] 2140 [ 1.10 - 1.8] x 2940 - [0.1] x 2940 $294 [Fararable 2 material Quantity varience in Actual standard Standes price Quantity Quantity - 2X1400 - 2940 ] x 1.90 + T 2800 - 2940] x 1.90 - (-1407 x 1.90 - $266 [untavarable]

1 Actual labour price variances Standard Acthe Price hours price 42 630 IX 1470 31 - 1470 2X1470 3 4 [ 31 - 21] *1490 $2940 [favorable] Labour Duantity variances stundna - Actual Standard rate hour] hours - - 1400 - 1440J X A 31 1-70] x 37 $-2140 [unfavorable]