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:
Becton Labs, Inc., produces various chemical compounds for industrial use. lDne 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 materials 2. 26 ounces $23.60 per ounce 5 5B. 50 Direct labor 6.?6 hours $12.08 per hour 8.46 Variable manufacturing overhead 6.?6 hours 5 3.60 per hour 2.16 Total standard cost per unit 5 61.16 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 11,000 ounces at a cost of $237,600. b. "here was no beginning inventory of materials; however, at the end oithe month, 2,650 ounces of material remained in ending \"inventory. c. "he company employs '18 lab technicians to work on the production of FIudex. During November, they each worked an average of 190 hours at an average pay rate of $10.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct laborhours. Variable manufacturing overhead costs during November totaled $6,200. e. During November, the company produced 3,750 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 longterm purchase contract Would you recommend that the company sign the contract? 2. For direct labor: a. Compute the rate and efciency variances. b. In the past, the 18 technicians employed in the production of Fludex consisted of 5 senior technicians and 13 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. Complete this question by entering your answers in the labs below. Req 1A Req 13 Req 2A Req 23 Red 3 Compute the variable overhead rate and efciency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and I"None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1variable overhead rate variance 1variable overhead efciency variance Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 For direct labor, compute the rate and efficiency variances. (Indicate 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.) Labor rate variance Labor efficiency varianceComplete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Compute the variable overhead rate and efficiency variances. (Indicate 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.) Variable overhead rate variance Variable overhead efficiency variance
