Becton Labs, Inc, produces various chemical compounds for industrial use. One compound, called Fudex, is prepared using an elaborate disuliling process. The company has developed standard costs for one unit of Fludex, as follows: During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $282000. b. There was no beginning inventory of materials; however, at the end of the month, 2,750 ounces of moterfal remained in ending inventory. c. The company employs 25 lab technicans to work on the production of Fludex. Durng Novernber, they each worked an average 110 hours at an average pay rate of $11.50 per hour. d. Varlable manufacturing overhead is assigned to Fudex on the basis of direct labor-hours. Variable manufacturing overhead cost during November totaled \$2,400. e. During November, the company produced 4,100 units of Fludex. Required: 1. For direct materlais: a. Compute the price and quantry variances. b. The materlals were purchased from a new supplier who is arxious 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 25 techniclans employed in the production of Fludex consisted of 5 senior technicians and 20 assistants. During November, the company experimented with fewer senlor techniclans and more assistants in order to reduce labor corts. Would you recommend that the new labor mix be continued? 3. Compute the vartable overhead rate and efficlency variances. Complete this question by entering your answers in the tabs below. For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting " F " for favorable, "U" for unfavornble, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Complete this question by entering your answers in the tabs below. For direct labor, compute the rate and efficiency variances. (Indicate the effect of each variance by silecting "F" for faworable, "U" for unfavorable, and "None" for no effect (i.e.n, zero variance), Input all amounts as positive valuesi) Complete this question by entering your answers in the tabs below. In the past, the 25 technicians employed in the production of fludex consisted of 5 senior technicians and 20 assistants. During November, the company experimented with fewer senior techicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? Complete this question by entering your answers in the tabs below. Compute the variable overhead rate and efficiency variances. (tindicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance), input all amounts as positive values.)
