During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 13,500 ounces at a cost of $266,625. b. There was no beginning inventory of materials; however, at the end of the month, 4,200 ounces of material remained in ending inventory. c. The company employs 24 lab technicians to work on the production of Fludex. During November, they each worked an average of 140 hours at an average pay rate of $14.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $6,800. e. During November, the company produced 3,800 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? Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 2.40 ounces 0.80 hours 0.80 hours Standard Price or Rate $21.00 per ounce $ 15.00 per hour $3.50 per hour Standard Cost $ 50.40 12.00 2.80 $ 65.20