Ee.47. Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because thecompany's customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor andcontrol its testing costs. Shown below are the standard costs for a typical test.Direct materials (2 test tubes @ $1.70 per tube)Direct labor (1 hour @ $32 per hour)Variable overhead (1 hour @ $7.00 per hour)Fixed overhead (1 hour @ $13.00 per hour)Total standard cost per testDirect materials (2,730 test tubes)Direct labor (1,339 hours)Variable overheadFixed overheadThe lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activityfor the month of November 2020, when 1,300 tests were conducted, resulted in the following.(a)Materials price varianceMaterials quantity varianceLabor price varianceLabor quantity variance$$$4,368Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were$3,600.$41,509$8,580Compute the price and quantity variances for direct materials and direct labor.$3.4016,21132.007.0013.00$55.40

The price variation of an item is calculated by multiplying the difference between the real unit…

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 @ $1.70 per tube) Direct labor (1 hour @ $32 per hour) Variable overhead (1 hour @ $7.00 per hour) Fixed overhead (1 hour @ $13.00 per hour) Total standard cost per test Direct materials (2,730 test tubes) Direct labor (1,339 hours) Variable overhead Fixed overhead (a) 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 1,300 tests were conducted, resulted in the following. Materials price variance Materials quantity variance Labor price variance Labor quantity variance $ $ $4,368 Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were $3,600. $ 41,509 $ 8,580 Compute the price and quantity variances for direct materials and direct labor. $3.40 16,211 32.00 7.00 13.00 $55.40

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 @ $1.70 per tube) Direct labor (1 hour @ $32 per hour) Variable overhead (1 hour @ $7.00 per hour) Fixed overhead (1 hour @ $13.00 per hour) Total standard cost per test Direct materials (2,730 test tubes) Direct labor (1,339 hours) Variable overhead Fixed overhead (a) 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 1,300 tests were conducted, resulted in the following. Materials price variance Materials quantity variance Labor price variance Labor quantity variance $ $ $4,368 Monthly budgeted fixed overhead is $18,460. Revenues for the month were $84,500, and selling and administrative expenses were $3,600. $ 41,509 $ 8,580 Compute the price and quantity variances for direct materials and direct labor. $3.40 16,211 32.00 7.00 13.00 $55.40

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 33P: Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and the...

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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 per hour) 6.00 Fixed overhead (1 hour @ $10 per hour) 10.00     Total standard cost per test $42.92 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 fixed overhead is…
Pace 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, Pace 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 per hour)                               6.00 Fixed overhead (1 hour @ $10 per hour)                                10.00                 Total standard cost per test                                         $42.92 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when 1,500 tests were conducted, resulted in the following. Direct materials (3,050 test…
Pace 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, Pace 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 per hour)                               6.00 Fixed overhead (1 hour @ $10 per hour)                                10.00                 Total standard cost per test                                         $42.92 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when 1,500 tests were conducted, resulted in the following. Direct materials (3,050 test…
Pace 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, Pace 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 per hour) 6.00 Fixed overhead (1 hour @ $10 per hour) 10.00 Total standard cost per test $42.92 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when 1,500 tests were conducted, resulted in the following. Direct materials (3,050 test…
Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and theother in Bernalillo, New Mexico. The owner of Biotechtron centralized the legal services functionin the Yuma office and had both laboratories send any legal questions or issues to the Yuma office. The legal services support center has budgeted fixed costs of $160,000 per year and a budg-eted variable rate of $65 per hour of professional time. The normal usage of the legal services cen-ter is 2,600 hours per year for the Yuma office and 1,400 hours per year for the Bernalillo office. This corresponds to the expected usage for the coming year.Required:1. Determine the amount of legal services support center costs that should be assigned to eachoffice. 2. Since the offices produce services, not tangible products, what purpose is served by allocat-ing the budgeted costs? 3. Now, assume that during the year, the legal services center incurred actual fixed costs of$163,000 and actual variable…
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Janet Gilbert is director of labs. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests. She has recently had a study conducted and has determined that her costs for these contracts are $50,000, of which $7,000 is the variable cost of supplies. The rest is non-avoidable fixed cost. She currently charges an average of $30 per test. She is thinking of lowering her price by 20% in hopes of raising her current volume of 20,000 tests by 25%. If she does so, she expects her variable cost per test will go up by 5%. Determine the following: What are the current revenues and the predicted revenues if these changes are made? What are the current variable costs and the predicted variable costs if these changes are made? What is the total contribution margin and the predicted contribution margin if these changes are made? What is the product margin? Should Janet make these proposed changes to her fees? You will answer YES…
Janet Gilbert is director of labs. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests. She has recently had a study conducted and has determined that her costs for these contracts are $50,000, of which $7,000 is the variable cost of supplies. The rest is non-avoidable fixed cost. She currently charges an average of $30 per test. She is thinking of lowering her price by 20% in hopes of raising her current volume of 20,000 tests by 25%. If she does so, she expects her variable cost per test will go up by 5%. Determine the following: What are the current revenues and the predicted revenues if these changes are made? What are the current variable costs and the predicted variable costs if these changes are made? What is the total contribution margin and the predicted contribution margin if these changes are made? What is the product margin? Should Janet make these proposed changes to her fees? You will answer YES…
Dr. Mirwais Amiri, chairman of the Amiri Medical Complex (AMC), is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at AMC than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Dr. Amiri has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available: Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. During the past month, 1,150 hours of labor time…
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in thehospital’s lab. Charges for lab tests are consistently higher at Valley View than at other hospitals andhave resulted in many complaints. Also, because of strict regulations on amounts reimbursed for labtests, payments received from insurance companies and governmental units have not been high enoughto cover lab costs.Mr. Fleming has asked you to evaluate costs in the hospital’s lab for the past month. The followinginformation is available:a. Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,800 bloodtests and 2,400 smears were performed in the lab.b. Small glass plates are used in both types of tests. During the past month, the hospital purchased12,000 plates at a cost of $28,200. This cost is net of a 6% quantity discount. 1,500 of these plateswere unused at the end of the month; no plates were on hand at the beginning of the month.c.…
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available: Two types of tests are performed in the lab—blood tests and smears. During the past month, 400 blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $37,440. 1,400 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. During the past month, 1,400 hours of…
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Mr. Fleming has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available: Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,500 blood tests and 4,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 22,000 plates at a cost of $52,800. 3,400 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. During the past month, 3,400 hours of labor…