2 Problem 10-14 (Algo) Basic Variance Analysis (L010-1, LO10-2, LO10-3] 16.66 Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: points Standard Quantity or Hours 2.30 ounces 0.50 hours 0.50 hours Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Price or Rate $26.00 per ounce $14.00 per hour $ 3.48 per hour eBook Standard Cost $59.80 7.00 1.70 $68.5@ Print During November, the following activity was recorded related to the production of Fludex: References a. Materials purchased, 12,500 ounces at a cost of $305,625 b. There was no beginning inventory of materials; however, at the end of the month, 2,800 ounces of material remained in ending Inventory. c. The company employs 21 lab technicians to work on the production of Fludex During November, they each worked an average of 150 hours at an average pay rate of $12.00 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,200. e. During November, the company produced 4,200 units of Fludex. Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor a. Compute the rate and efficiency variances b. In the past, the 21 technicians employed in the production of Fludex consisted of 4 senior technicians and 17 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Ch 10 Homework Saved 2 IDU hours at an average pay rate or 2.0 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,200. e. During November, the company produced 4,200 units of Fludex 16.66 points Book Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 21 technicians employed in the production of Fludex consisted of 4 senior technicians and 17 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Print References Complete this question by entering your answers in the tabs below. Reg 1A Reg 13 Reg 2A Reg 28 Reg For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting for favorabile, "U" for unfavorable, and "None for no effect (.e., zero variance). Input all amounts as positive values.) Materiais price variance Materiais quantity variance Reg18