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) Total standard cost per test $42.92 10.00 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 1,475 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 foed overhead is $14,000. Revenues for the month were $75,000 and selling and administrative experses were $5,000 HART LABS, INC. Income Statement For the Month Ended November 30, 2020 Sales Revenue Cost of Service Provided Gross Profit (at Standard Variances Materials Price Variance 2.92 Favorable Labor Price Variance 24 Favorable Overhead Variance 6 Favorable Materials Quantity Variance 4270 Unfavorable Labor Quantity Variance 35650 Unfavorable Total Variance Favorable Gross Profit (Actual Selling and Administrative Expenses Net Income/(Loss) HART LABS, INC. Income Statement For the Month Ended November 30, 2020 75000 14000 89000 2.92 Favorable 24 Favorable 6 Favorable 4270 Unfavorable 35650 Unfavorable Favorable 39953 49047 5000 i 44047