Compute the total overhead variance. Total Overhead variance $ Problem 23-5A (Pa
ID: 2560152 • Letter: C
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Compute the total overhead variance. Total Overhead variance $
Problem 23-5A (Part Level Submission)
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Problem 23-5A (Part Level Submission)
Hart 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, Hart 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 @ $6.00 per hour) 6.00 Fixed overhead (1 hour @ $10.00 per hour) 10.00 Total standard cost per test $42.92The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activity for the month of November 2017, when 1,475 tests were conducted, resulted in the following: Direct materials (3,050 test tubes) $4,270 Direct labor (1,550 hours) 35,650 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.
Explanation / Answer
ACTUAL TEST 1475 STANDARD UNITS/HRS RATE AMOUNT ACTUAL UNIT/HR RATE AMNT DIRECT MATERIAL 2950 (2*1475) 1.46 4307 DIRECT MATERIAL 3050 1.4 4270 D.L. 1475 (1*1475) 24 35400 DL 1550 23 35650 VAR. O/H 1475 (1*1475) 10 14750 VAR. O/H 1550 4.774193548 7400 MATERIAL PRICE VARIANCE= (STANDARD PRICE -ACTUAL PRICE)ACTUAL UNIT 183(F) (1.46-1.4)*3050 MAT. QUANT. VAR (stnd.quantity - actual quant)stand price -146(UF) (2950-3050)*1.46 labour price variance (std rate - actual rate) actual hour 1550(F) (24-23)*1550 labour quant variance (std hr - actual hr)std rate -1800(UF) (1475-1550)*24 ACTUAL BUGTED STANDARD VAR. O/H 1550 4.774193548 7400 BUD. VAR O/H 14750 VAR. O/H 1475 (1*1475) 10 14750 FIXED 15000 BUDG, FOH 14000 FIXED 1475 (1*1475) 10 14750 22400 28750 29500 CONTROLLABLE VARIANCE = ACTUAL -BUDGTED -6350 VOLUME VARIANCE= BUDGTED - STANDARD -750 TOTAL OVERHEAD VARIANCE= CONTROLABLE + VOLUME VARIANCE -7100 UF
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