Question
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the companys customers are governmental agencies, prices are
Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the companys 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 @ $ 1.90 per tube) | $ 3.80 | |
Direct labor ( 1 hour @ $ 31 per hour) | 31.00 | |
Variable overhead ( 1 hour @ $ 6.00 per hour) | 6.00 | |
Fixed overhead ( 1 hour @ $ 12.00 per hour) | 12.00 | |
Total standard cost per test | $ 52.80 |
The 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 2020, when 1,100 tests were conducted, resulted in the following.
Direct materials ( 2,310 test tubes) | $ 4,158 | |
Direct labor ( 1,133 hours) | 33,990 | |
Variable overhead | 6,534 | |
Fixed overhead | 12,309 |
Monthly budgeted fixed overhead is $ 15,840. Revenues for the month were $ 72,600, and selling and administrative expenses were $ 4,800.
Compute the total overhead variance.
Total Overhead variance | $ | Choose your answer here FavorableUnfavorableNeither favorable nor unfavorable |
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