Problem 23-5A (part level submission) Pace Labs, Inc. provides mad cow disease t

Question

Problem 23-5A (part level submission) 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. $2.00 31.00 Direct materials (2 test tubes $1.00 per tube) Direct labor (1 hour $31 per hour) Variable overhead (1 hour $7 per hour) Fixed overhead (1 hour $12 per hour) 12 Total standard cost per test $52.00 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 1,100 tests were conducted, resulted in the following: Direct materials (2,277 test tubes) Direct labor (1,144 hours) Variable overhead Fixed overhead 1,958 33,176 6,534 13,706 Monthly budgeted fixed overhead is $18,000. Revenues for the month were $72,600, and selling and administrative expenses were $3,910. Compute the price and quantity variances for direct materials and direct labor. Materials price variance Materials quantity variance Labor price variance Labor quantity variance Click if you would like to Show Work for this question: Favorable Unfavorable Favorable Unfavorable Open Show Work LINK TO TEXT VIDEO: SIMILAR PROBLEM

Explanation / Answer

A Material Price variance (Standard Price-Actual Price)*Actula Quantity used (1-1958/2277)*2277 = 319 F Material Quantity variance (Standard Quantity for Actual Output-Actual Quantity)*Standard Price (1100*2-2277)*1 = 77 U B Direct labor rate variance (Standard rate- Actual rate)*Actual hours (31-33176/1144)*1144 2288 F Labour Efficiency Variance (Standard Hours-Actual Hours)*Standard rate (1100*1-1144)*31 1364 U

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