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 over head Total standard cost per unit Standard Quantity or Hours 2.10 ounces 0.80 hours 0.80 hours Standard Pride or Rate $22.00 per ounce $15.00 per hour $ 2.50 per hour Standard Cont $ 46.20 12.00 2.00 $ 60.20 During November the following activity was recorded related to the production of Fludex: a. Materials purchased, 10,500 ounces at a cost of $216,825. b. There was no beginning inventory of materials, however, at the end of the month, 2,600 ounces of maternal remained in ending inventory c. The company employs 20 lab technicians to work on the production of Fiudex During November, they each worked an average of 180 hours at an average pay rate of $14.00 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor hours. Variable manufacturing overhead costs during November totaled $7.000. e. During November, the company produced 3,700 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 lobor: a. Compute the rate and efficiency variances b. In the past, the 20 technicians employed in the production of Fludex consisted of 8 senior technicians and 12 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 tabs below. Req IA Reg 1B Req 2A Reg 28 Req3 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 (I.e., zero variance), Input all amounts as positive values.) November, the company experimented with fewer senior technicians and more assistants in order to reduce laba 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 tabs below. Req 1A Req 1B Req 2A Req 28 Req3 For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting "F" f favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance U November, the company experimented with fewer senior technicians and more assistants in order to reduce labor cost ecommend 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 tabs below. Reg 1A Req 18 Req 2A Reg 2B Req3 For direct labor, compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorab "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance November, the company experimented with fewer senior technicians and more assistants in order 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 tabs below. Req 1A Reg 1B Req 2A Req 2B Req3 Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as pos Variable overhead rate variance Variable overhead efficiency variance
