Hart Labs Inc Please help Hart Labs Inc Please help Please h

Waygandt, Financial & Managerial Accounting, 2e BACK a must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Hart Labs, Inc. provides mad cow disease testing for both state and federal Hart Labs governmental agricultural agencles. Because the company\'s customers are gavernmental agencles, prices are stridtly regulated. Therefore, Direct materials (2 test tubes $1.40 per tube) Direct labor (1 hour $30 per hour) Variable overhead (1 hour $6.00 per hour) Fxed overhead (1 hour $13.00 per hour) $2.80 30.00 6.00 13.00 51.80 Total standard cost per test The leb 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 1,200 tests were conductead, resulted In the following: Direct meterials (2,448 test tubes) Direct labor (1,236 hours) Voriable overhead Fixed overhead 3,158 35,844 7,068 14,392 Monthly budgeted fixed overhead is $19,110. Revenues for the month were $79,200, and seling and administrative expenses were $4,300. Y (a) Compute the price and quentity variances for direct matenials and direct labor. (Round answers to o decimal places, e.g.5,275) Materiais price variance Materials quantity variance Labor price variance Labor quantity variances Unfavorable

Solution

HART LABS, INC. Income Statement For the Month Ended November 30, 2017 Service revenue $79,200 Cost of service provided (at standard) (1,200 X $51.80) 62,160 Gross profit (at standard) 17,040 Variances Materials price $269 Favorable Materials quantity 67 Unfavorable Labor price 1,236 Favorable Labor quantity 1,080 Unfavorable Overhead 1,140 Favorable Total variance—favorable Favorable 1,498 Gross profit (actual) 18,538 Selling and administrative expenses 4,300 Net income $14,238 Total Overhead variance = Actual overhead - Overhead applied Total Overhead variance = (7068+14592) - (1200 x 19) Total Overhead variance = 21660 - 22800 = 1140 Favorable