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: Standard Quantity Standard price Standard or Hours or Rate Cost Direct materins 2.10 ounces $24.00 per ounce $50.40 Direct labor 0.40 hours $14.00 per hour 5.60 Variable manufacturing over head 0.40 hours $ 2.50 per hour 1.60 Total standard cost per unit $57.88 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 11,500 ounces at a cost of $259,325 b. There was no beginning inventory of materials; however, at the end of the month, 2,700 ounces of material remained in ending inventory c. The company employs 23 lab technicians to work on the production of Fludex. During November they each worked an average of 100 hours at an average pay rate of $11.00 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor hours. Variable manufacturing overhead costs during November totaled $2,300, e. During November, the company produced 4,100 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 23 technicians employed in the production of Fludex consisted of 4 senior technicians and 19 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? ok 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Reg 28 Reg 3 For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (t.e., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Reg 3 Req 1A Reg 18 Req 2A Reg 28 For direct materials, 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? ) Yes NO 3. Compute the variable overhead rate and efficiency variances Complete this question by entering your answers in the tabs below. Req1A Req 18 Reg 2A Reg 28 Reg 3 For direct labor, compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "e" for favorable, "U" for unfavorable, and "None" for no effect (ezero variance), Input all amounts as positive values.) Laborrate variance Labor efficiency variance 3. Compute the variable overhead rate and efficiency variances Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2A Reg 28 Req3 In the past, the 23 technicians employed in the production of Fudex consisted of 4 senior technicians and 19 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? ires NO 3. Compute the variable overhead rate and efficiency variances Complete this question by entering your answers in the tabs below. Req 1A Reg 10 Reg 2A Reg 28 Reg 3 Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "*" for favorable, "U" for unfavorable, and "None" for no effect (1., zero variance) Input all amounts as positive values.) Variable overhead rate variance Variable overhead efficiency variance
