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: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.40 ounces 0.70 hours 0.70 hours Standard Price or Rate $18.00 per ounce $14.00 per hour $ 3.00 per hour Standard Cost $ 43.20 9.80 2.10 $ 55.10 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $198,000 b. There was no beginning inventory of materials; however, at the end of the month, 3.200 ounces of material remained in ending inventory c. The company employs 20 lab technicians to work on the production of Fludex. During November, they each worked an average of 160 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 $4,800. e During November, the company produced 3600 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 20 technicians employed in the production of Fludex consisted of 5 senior technicians and 15 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. 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2A Req 2B Req 3 For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by sele favorable, "U" for unfavorable, and "None" for no effect (1.e, zero variance). Input all amounts as positive Materials price variance Materials quantity variance Rog Reg 1B > 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 Req 2B Reg 3 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? Oros ONO 3. Compute the variable overhead rate and efficiency variances Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Req3 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 (le, zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance recommend that the new labor nix be 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Req IA Reg 1B Reg 2A Reg 28 Req3 in the past, the 20 technicians employed in the production of Fludex consisted of 5 senior technicians and 15 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? Yes ONO Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 3 Reg 28 Compute the variable overhead rate and efficiency variances. (tridicate the effect of each variance by selecting "E" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance) Input all amounts as positive values.) Variable overhead rate variance Variable overhead officiency variance
