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(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 overhead8,304
Fixed overhead14,904

 


 

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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