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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

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 @ $1.90 per tube) $3.80

Direct labor (1 hour @ $30 per hour) 30.00

Variable overhead (1 hour @ $7.00 per hour) 7.00

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 2017, when 1,100 tests were conducted, resulted in the following:


Direct materials (2,222 test tubes) $3,933

Direct labor (1,155 hours) 33,495

Variable overhead 7,106

Fixed overhead 13,101


Monthly budgeted fixed overhead is $17,400. Revenues for the month were $73,700, and selling and administrative expenses were $4,500.


Materials price variance $288.80 favorable

Materials quantity variance $41.80 unfavorable

Labor price variance $1,155 favorable

Labor quantity variance $1,650 unfavorable


Total Overhead variance $693 favorable


Make an income statement for management.

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