Pace Labs, Inc. provides mad cow disease testing for both state and federal gove
ID: 2475332 • Letter: P
Question
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. 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 1,100 tests were conducted, resulted in the following: Monthly budgeted fixed overhead is $18,200. Revenues for the month were $73,700, and selling and administrative expenses were $3,630. (a) Compute the price and quantity variances for direct materials and direct labor.Explanation / Answer
Material Price Variance=Actual Quantity of Input at Actual Price-Actual Quantity of Input at Standard Price Material Price Variance=Actual Quantity*Actual Price-Actual Quantity*Standard Price Material Price Variance=Actual Quantity(Actual Price-Standard Price) Actual Quantity 2255 Actual Price 4127 Actual Price per unit 1.830155211 Standard Price per unit 2 Material Price Variance=2255(1.83-2) Material Price Variance=383 Material Quantity Variance=Actual Quantity of Input at Standard Price-Standard Quantity allowed for output at Standard Price Material Quantity Variance=Actual Quantity*Standard Price-Standard Quantity*Standard Price Material Quantity Variance=Standard Price(Actual Quantity-Standard Quantity) Standard Price per unit 2 Actual Quantity for 1100 tests 2255 Standard Quantity for 1100 tests 2200 Material Quantity Variance=2(2255-2200) Material Quantity Variance=110 Labor Price Variance=Actual Hours of Input at Actual Rate-Actual Hours of Input at Standard Rate Labor Price Variance=Actual Hours*Actual Rate-Actual Hours*Standard Rate Labor Price Variance=Actual Hours(Actual Rate-Standard Rate) 1 2 (2)/(1) 3 4 (3)/(4) SR per hour Total SR Total SH Total AR AR per hour Total AH Variable 6 8400 1400 6985 6.90 1013 Fixed 13 18200 1400 13167 13 1013 Total 19 26600 2800 20152 19.89536032 2026 Labor Price Variance=Actual Hours(Actual Rate-Standard Rate) Labor Price Variance=2026(19.90-19) Labor Price Variance=1814 Labour Quantity Variance=Standard Rate*Actual Hours-Standard Rate*Standard Hours Labour Quantity Variance=Standard Rate(Actual Hours-Standard Hours) Labour Quantity Variance=19(2026-2800) Labour Quantity Variance=19(2026-2800)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.