Farm Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies

P11-5A Farm 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, Farm Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test.

Direct materials (2 test tubes @ $1.50 per tube) $3
Direct labor (1 hour @ $25 per hour) 25
Variable overhead (1 hour @ $5 per hour) 5
Fixed overhead (1 hour @ $10 per hour) 10
Total standard cost per test $43

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 2008, when 1,500 tests were conducted, resulted in the following:

Direct materials (3,050 test tubes) $ 4,270
Direct labor (1,600 hours) 36,800
Variable overhead 7,400
Fixed overhead 14,000

Monthly budgeted fixed overhead is $14,000. Revenues for the month were $75,000, and selling and administrative expenses were $4,000.

Instructions:
a) Compute the price and quantity variances for direct materials and direct labor.
b) Compute the total overhead variance.
c) Prepare an income statement for management.
d) Provide possible explanations for each unfavorable variance.

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Listed are typical financial activities of a local governmental unit

Exercise 17-2 (General Fund Journal Entries) Listed are typical financial activities of a local governmental unit.

1. The legislative unit approved the budget for the general operating fund. Estimated revenues are $4,000,000, and appropriations for expenditures are $3,800,000.
2. Statements of property tax assessments totaling $3,000,000 were mailed to property owners. It is estimated that 4% of the assessed taxes will be uncollectible.
3. Notification was received from the state that this unit’s share of sales tax revenues from the fourth quarter of the previous year will be $500,000.
4. The manager signed a contract to purchase equipment costing $250,000.
5. The equipment ordered above was received and paid for.
6. Employees were paid their biweekly wages of $36,000.
7. Property taxes in the amount of $2,050,000 were collected.

Required:
Prepare the necessary journal entries to record the transactions listed above in the records of the General Fund


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