Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Becton Labs, Incorporated, produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed

image text in transcribed
Becton Labs, Incorporated, 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:
During November, the following activity was recorded related to the production of Fludex:
a. Materials purchased, 11,500 ounces at a cost of $178,825.
b. There was no beginning inventory of materials; however, at the end of the month, 3,150 ounces of material remained in ending
inventory.
c. The company employs 17 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 $11.50 per hour.
d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs
during November totaled $3,000.
e. During November, the company produced 3,500 units of Fludex.
Required:
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?
For direct labor:
a. Compute the rate and efficiency variances.
b. In the past, the 17 technicians employed in the production of Fludex consisted of 4 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?
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 2B
Compute the variable overhead rate and efficiency variances.
Note: 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.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Cost Accounting A Managerial Emphasis

Authors: Srikant M. Datar, Madhav V. Rajan

16th edition

134475585, 978-0134475998, 134475992, 978-0134475585

More Books

Students also viewed these Accounting questions