Becton Labs, Incorporated, produces various chemical compounds for industrial use. One compound, called Fludex, has the following standard cost per unit: Standard Quantity or Standard Price or Hours 2.40 ounces 0.70 hours 0.70 hours Rate $ 18.00 per ounce $ 14.00 per hour $ 3.00 per hour Standard Cost $ 43.20 9.80 2.10 $ 55.10 Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 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 3,600 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 the company sign the contract? direct labai