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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

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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 Standard Price Standard O Hours or Rate Cost Direct materials 2.30 ounces $26.00 per ounce 359.00 Direct labor 2.50 hours $14.00 per hour 7.00 Variable manufacturing overhead 0.50 hours $ 3.40 per hour 1.70 Total standard cost per unit 2.50 During November, the following activity was recorded related to the production of Fludex a. Materials purchased, 12,500 ounces at a cost of $305,625 There was no beginning inventory of materials however, at the end of the month 2,800 ounces of material remained in ending inventory The company employs 21 ab technicians to work on the production of Fludex During November they each worked an average of 150 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 duting November totaled $4,200. e Duting November, the company produced 4 200 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 21technicians 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 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

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