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 or hours	Standard price or rate	Standard cost
Direct materials	2.30 ounces	$26.00 per ounce	$59.80
Direct labor	0.50 hours	$14.00 per hour	7.00
Variable manufacturing overhead	0.50 hours	$3.40 per hour	1.70

Total standard cost per unit $ 68.50

During November, the following activity was recorded relative to production of Fludex:

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 worked an average of 150 hours at an average 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, 4,200 good units of Fludex were produced.

Required:

1. For direct materials:

1. Compute the price and quantity variances
2. 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:

1. Compute the rate and efficiency variances>
2. 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 assistance in order to reduce labor costs. Would you recommend that new labor mix be continued?

3. Compute the variable overhead rate and efficiency variances.