Question

CALCULATOR PRINTER VERSION BLACK roblem 23-5A (Part Level Submission) art Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company's customers are governmental gencies, 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 $3.40 32.00 7.00 13.00 $55.40 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 (2,626 test tubes) Direct labor (1,339 hours) Variable overhead Fixed overhead $3.992 41.509 8,580 16.211 P i es for the month were $84,500, and selling and administrative expenses were

Answer 1

	Standard Fixed Overhead = $13*1300 = $16900
	Standard Variable Overhead = $7*1300 = $9100
	Standard Total Overhead = $16900+$9100 = $26000
	Actual Total Overhead = Fixed Overhead + Variable Overhead = $8580+$16211 = $24791
Total Overhead Variance = Standard Total Overhead - Actual Total Overhead = $26000 - $24791 = $ 1209 Favourable

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