## (Solution Download) Pace Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultura

Pace Labs, Inc. provides mad cow disease testing for both state

and federal governmental agricultural agencies. Because the

companyAc??cs customers are governmental agencies, prices are strictly

regulated. Therefore, Pace Labs must constantly monitor and control

its testing costs. Shown below are the standard costs for a typical

test.

 Direct materials (2 test tubes @ \$1.00 per tube) \$ 2.00 Direct labor (1 hour @ \$32 per hour) 32.00 Variable overhead (1 hour @ \$7 per hour) 7 Fixed overhead (1 hour @ \$13 per hour) 13 Total standard cost per test \$54.00

The lab does not maintain an inventory of test tubes. Therefore,

the tubes purchased each month are used that month. Actual activity

for the month of November 2014, when 1,200 tests were conducted,

resulted in the following:

 Direct materials (2,472 test tubes) \$ 2,200 Direct labor (1,248 hours) 38,688 Variable overhead 8,304 Fixed overhead 14,904

Monthly budgeted fixed overhead is \$18,590. Revenues for the month

were \$79,200, and selling and administrative expenses were \$4,170.

(a) Compute the price and quantity variances

for direct materials and direct labor.

 Materials price variance \$ UnfavorableFavorable Materials quantity variance \$ UnfavorableFavorable Labor price variance \$ FavorableUnfavorable Labor quantity variance \$ FavorableUnfavorable

(b) Compute the total overhead variance.

 Total Overhead variance \$ FavorableUnfavorable

I would like to understand how to solve this problem not just

get the answers, because I have an exam tomorrow. Thank you so

much.

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