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 $14,000. Revenues for the month were $75,000, and selling and administrative expenses were $5,000. The price and quantity variances for direct materials and direct labor as follows: Materials price variance   $183 Favorable   Materials quantity variance   $146 Unfavorable   Labor price variance   $1,550 Favorable   Labor quantity variance   $1,800 Unfavorable   (d) Provide possible explanations for each unfavorable variance.

Louis Clark, the new administrator for the surgical clinic, was trying to figure out how to allocate is indirect expenses.  His staff were complaining that the current method of taking a percentage of revenues was unfair.  He decided to try to allocate utilities expense based on square footage of each department, to allocate administration expense based on direct costs, and to allocate laboratory expense based on tests.  Using the information in Exhibit 12.11 below, calculate the total indirect costs (utilities, administration, and laboratory) allocated to the Day-Op Suite; Cystoscopy; and Endoscopy.   Exhibit 12-11                                             A   B   C           Square Feet   Dept. Costs   Lab Tests       Utilities       $400,000           Administration   4,000   $700,000           Laboratory   2,000   $750,000           Day-Op suite…

Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information.   The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were:   Cost Pools   Costs Activity Drivers Receiving $ 600,000 Direct material cost Manufacturing   5,500,000 Machine-hours Machine setup   900,000 Production runs Shipping   1,000,000 Units shipped…

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