Reference no: EM132515059

Question - Canalt Health Laboratories performs testing of nutritional elements and toxic metals to professional health practitioners. Because the prices in the industry are strictly regulated, the costs incurred must be carefully monitored and controlled. Below are the standard costs for a typical test.

Direct materials (1 petrie dish @ $2 per dish) $2.00

Direct labour (0.5 hours @ $20 per hour) 10.00

Variable overhead (0.5 hours @ $8 per hour) 4.00

Fixed overhead (0.5 hours @ $4 per hour) 2.00

Total standard cost per test $18.00

The lab does not maintain an inventory of petrie dishes. Therefore, the dishes purchased each month are used that month. Actual activity for the month of October 2019, when 2,500 tests were conducted, resulted in the following.

Direct materials (2,540 dishes) $5,207

Direct labour (1,240 hours) 26,164

Variable overhead 10,100

Fixed overhead 5,900

Monthly budgeted fixed overhead is $6,000. Revenues for the month were $58,000, and selling and administrative expenses were $2,500.

Instructions -

(a) Compute the price and quantity variances for direct materials and direct labour.

(b) Compute the total overhead variance.