Question

Sheridan 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, Sheridan Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. $2.80 Direct materials (2 test tubes @ $1.40 per tube) Direct labor (1 hour @ $30 per hour) Variable overhead (1 hour @ $6.00 per hour) Fixed overhead (1 hour @ $13.00 per hour) Total standard cost per test 30.00 6.00 13.00 $51.80 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 1,200 tests were conducted, resulted in the following. Direct materials (2,520 test tubes) Direct labor (1,236 hours) Variable overhead Fixed overhead $3,276 35,844 7,068 14,592 Monthly budgeted fixed overhead is $19,110. Revenues for the month were $79,200, and selling and administrative expenses were $4,300. (a) Your answer is correct. Compute the price and quantity variances for direct materials and direct labor. Materials price variance Favorable Materials quantity variance Unfavorable Labor price variance 1236 Favorable Labor quantity variance 1080) Unfavorable

Answer 1

Sheridan Labs inc Income Statement For the Month Ended November 30,2020 Sales Revenue $79,200.00 Cost of service provided $62,160.00 Gross profit (at Standard) $17,040.00 variances $ 252.00 Favourable $ 168.00 UnFavourable materials price variance Materials quantity variance Labour price variance labour quantity variance $1,236.00 Favourable $1,080.00 UnFavourable overhead variance $1,140.00 Favourable $ 1,380.00 Favourable Total variance Gross profit Actual Selling and administrative expense $18,420.00 $ 4,300.00 Net income /(loss) $14,120.00

November Microsoft Excel Formulas Data View Developer Home Insert Page Layout Review fix Define Name Show Formulas 123 Trace Precedents Calculate Now Trace Dependents Error Checking Evaluate Formula Window Use in Formula Calculation Calculate Sheet Options Date & Lookup & Math Time Reference & Trig Functions Insert AutoSum Recently Financial Logical Text More Name Watch Remove Arrows Create from Selection Function Used Manager Formula Auditing Calculation Function Library Defined Names fSheridan Labs inc A1 B C Sheridan Labs inc 1 Income Statement 2 For the Month Ended November 30,2020 4 5 Sales Revenue 79200 6 Cost of service provided 7 Gross profit (at Standard) 62160 =D5-D6 8 variances 9 materials price variance 10 Materials quantity variance 11 Labour price variance 12 labour quantity variance 13 overhead variance Favourable 252 UnFavourable 168 Favourable 1236 1080 UnFavourable Favourable 1140 14 Total variance B9-B10+B11-B12+B13 C13 15 Gross profit Actual 16 Selling and administrative expense 17 Net income /(loss) D7+D14 4300 -D15-D16 18 19 20 21 22 23 Sheet895 Sheet930 Sheet900 Sheet901 Sheet985 Sheet987 November creditor Sheet837 Sheet910 Sheet947 Sheet1019 囲回四 100% Average: 16708 Sum: 200496 Ready Circular References Count: 34 12:11 AM Desktop 28-Nov-19