Ches 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 or Hours or late Cost Direct materials 2.10 ounces $22.00 per ounce $46.20 Direct labor 0.80 hours $15.00 per hour 12.00 Variable manufacturing averhead 9.80 hours $ 2.50 per hour Total standard cost per unit $60.20 2.00 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, 2600 ounces of material remained in ending inventory The company employs 20 lab technicians to work on the production of Fludex 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 Fiudex 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 Check my work Required: 1. For direct materials: a Compute the price and quantity variances. 6. 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 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. Reg 1A Req 1B Req 2A Req 2B Req3 For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by se favorable, "U" for unfavorable, and "None" for no effect (ie., zero variance). Input all amounts as positive Materials price variance Materials quantity variance Req 1B > Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2A Req 28 Reg 3 For direct materials, 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? Yes No Complete this question by entering your answers in the tabs below. Req 1A Req 18 Reg 2A Reg 28 Reg 3 For direct labor, compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (le, zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance Check 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 Reg 2B Reg 3 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? Yes No Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Req3 Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting for favorable, "U" for unfavorable, and "None" for no effect (sero variance). Input all amounts as positive values.) Variable overhead rate variance Variable overhead efficiency variance
