Hart Labs, Inc

Subject:AccountingPrice:3.87 Bought7

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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 @ $1.60 per tube)$3.20Direct labor (1 hour @ $32 per hour)32.00Variable overhead (1 hour @ $7.00 per hour)7.00Fixed overhead (1 hour @ $12.00 per hour)12.00    Total standard cost per test$54.20

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 1,000 tests were conducted, resulted in the following:

 

Direct materials (2,020 test tubes)$2,929Direct labor (1,040 hours)32,240Variable overhead6,460Fixed overhead11,560

Monthly budgeted fixed overhead is $17,040. Revenues for the month were $67,000, and selling and administrative expenses were $4,700.

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$

 FavorableUnfavorableNeither favorable nor unfavorable

Materials quantity variance$

 Neither favorable nor unfavorableUnfavorableFavorable

Labor price variance$

 UnfavorableFavorableNeither favorable nor unfavorable

Labor quantity variance$

 FavorableUnfavorableNeither favorable nor unfavorable

Compute the total overhead variance.

Total Overhead variance$

 FavorableNeither favorable nor unfavorableUnfavorable

Prepare an income statement for management.

HART LABS, INC.

Income Statement

November 30, 2017

For the Year Ended November 30, 2017

For the Month Ended November 30, 2017

Cost of Service Provided (at standard)

Gross Profit (actual)

Gross Profit (at standard)

Labor PriceLabor Quantity

Materials Price

Materials Quantity

Net Income / (Loss)

Overhead

Service Revenue

Selling and Administrative Expenses

Total VarianceVariances