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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
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 or Hours Standard Price Standard or Rate $27.00 per ounce 12.00 per hour 3.50 per hour Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.40 ounces 0.60 hours 0.60 hours $64.80 7.20 2.10 $74.10 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 13,000 ounces at a cost of $330,200 b. There was no beginning inventory of materials; however, at the end of the month, 2,850 ounces of C. The company employs 20 lab technicians to work on the production of Fludex. During November, they d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable e. During November, the company produced 4,200 units of Fludex. material remained in ending inventory. each worked an average of 160 hours at an average pay rate of $11.00 per hour. manufacturing overhead costs during November totaled $6,000 Requirec 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
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