Pace 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, 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 @ $1.46 per tube)                $ 2.92   Direct Labor (1 hour @ $24 per hour)                                       24.00   Variable overhead (1 hour @ $6 per hour)                               6.00   Fixed overhead (1 hour @ $10 per hour)                                10.00                 Total standard cost per test                                           $42.92 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 1,500 tests were conducted, resulted in the following.   Direct materials (3,050 test tubes)                          $ 4,209   Direct Labor (1,600 hours)                                            36,800   Variable overhead                                                            7,400   Fixed overhead                                                                15,000 Monthly budgeted fixed overhead is $14,000. Revenues for the month were $75,000, and selling and administrative expenses were $5,000 Instructions : Compute the price and quantity variances for direct materials and direct labor

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Pace 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, 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 @ $1.46 per tube)                $ 2.92

  Direct Labor (1 hour @ $24 per hour)                                       24.00

  Variable overhead (1 hour @ $6 per hour)                               6.00

  Fixed overhead (1 hour @ $10 per hour)                                10.00

                Total standard cost per test                                           $42.92

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 1,500 tests were conducted, resulted in the following.

  Direct materials (3,050 test tubes)                          $ 4,209

  Direct Labor (1,600 hours)                                            36,800

  Variable overhead                                                            7,400

  Fixed overhead                                                                15,000

Monthly budgeted fixed overhead is $14,000. Revenues for the month were $75,000, and selling and administrative expenses were $5,000

Instructions : Compute the price and quantity variances for direct materials and direct labor

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