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(SO 1, 2, 3) Prepare a flexible budget, determine standard costs, and calculate variances. P12-43A Under a contract with the provincial government, ChemLabs Inc. analyzes
(SO 1, 2, 3) Prepare a flexible budget, determine standard costs, and calculate variances. P12-43A Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial com- position of well water in various municipalities in the interior of British Columbia. The contract price is $25.20 per test performed. The normal volume is 10,000 tests per month. Each test requires two testing kits, which have a standard price of $3.80 each. Direct labour to perform the test is 10 minutes at $22.80 per hour. At normal volume, the overhead costs are as follows: Variable overhead costs Indirect labour Utilities Labour-related costs Laboratory maintenance $18,000 4,000 15,000 11,000 $ 48,000 Fixed overhead costs Depreciation Supervisor 28,000 30,000 9,000 2,000 Base utilities Insurance Total overhead 69,000 $117,000 Overhead is allocated based on direct labour hours
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