Hi tutor, I downloaded the attached file (6995832): Becton Labs, Inc, Basic Variance analysis from Course Hero's website. However, I do not know where the numbers in the solutions come from. The attached Excel file is my solution to this question. Our results seem quite difference. Could you please check my solution and tell me where is wrong, if any?

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 or Rate Standard Cost Direct materials 2.5 ounces $20.00 per ounce $50.00 Direct labor 1.4 hours $12.50 per hour 17.50 Variable manufacturing overhead 1.4 hours $3.50 per hour 4.90 $72.40 -------------------------------------------------------------------------------During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $225,000. b. There was no beginning inventory of materials; however, at the end of the month, 2,500 ounces of material remained in ending inventory. c. The company employs 35 lab technicians to work on the production of Fludex. During November, they worked an average of 160 hours at an average rate of $12 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct laborhours. Variable manufacturing overhead costs during November totaled $18,200. e. During November, 3,750 good units of Fludex were produced. The company's management is anxious to determine the efficiency of the Fludex production activities. Requirement 1: For direct materials used in the production of Fludex: (a) Compute the price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Materials price variance $ (Click to select)NoneUF Materials quantity variance $ (Click to select)UNoneF -------------------------------------------------------------------------------Solution: Materials price variance = AQ (AP - SP) 9,420 ounces ($49,926/9,420 - $5.70 per ounce) = $4,800 Favorable Materials quantity variance = SP (AQ - SQ) $5.70 X ([9,420 - 1,600] ounces - [4,600 x 1.30] ounces) $5.70 X (7,820 - 5980) = $10,488 Unfavorable (b) The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? (Click to select)YesNo Solution: Yes, the contract labor should be signed. Requirement 2: For direct labor employed in the production of Fludex: (a) Compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Labor rate variance $ (Click to select)UNoneF Labor efficiency variance $ (Click to select)FUNone -------------------------------------------------------------------------------Solution: Labor Rate (Price) Variance = AH (AR - SR) [40 x 61.50] hours X ($12.30 per hour - $11.60 per hour) = $1,722 Unfavorable Labor efficiency (Usage) variance = SR (AH - SH) $11.60 per hour X ([40 x 61.50] hours - [0.6 x 4600] hours) = $11.60 X (2,460 - 2,760) = $3,480 Favorable (b) In the past, the 35 technicians employed in the production of Fludex consisted of 20 senior technicians and 15 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to save costs. Would you recommend that the new labor mix be continued? (Click to select)YesNo Solution: No, new labor mix should not be continued because new labor mix increases overall labor costs. Requirement 3: (a) Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Variable overhead spending variance $ (Click to select)UFNone Variable overhead efficiency variance $ (Click to select)FNoneU -------------------------------------------------------------------------------Solution: Variable overhead spending variance = AH (AR - SR) 5,600 hours ($3.25 per hour* - $3.50 per hour) = $1,400 F *$18,200 5,600 hours = $3.25 per hour Variable overhead efficiency variance = SR (AH - SH) $3.50 per hour (5,600 hours - 5,250 hours) = $1,225 U (b) What relation can you see between this efficiency variance and the labor efficiency variance? (Click to select) Directly related. Independent. Solution: They are directly related, if labor efficiency variance is unfavorable then variable overhead efficiency will be unfavorable. Pr.1014 Standard Quantity Direct materials Direct labor Variable MOH a. Material b. c. Actual Quantity Actual Price Quantity 12000 Unit Price $18.8 Total Material Cost $225,000 Used 50 17.5 4.9 72.4 9500 $18.8 $178,125 2500 ounces of materail remained in ending inventory. Actual Hours Actual Rate Hours 5600 =160 hours * 35 technicians Rate $12 Total Lablor Cost $67,200 d. Hours Rate Total MOH e. Standard Standard Price Cost or Rate 2.5 20 1.4 12.5 1.4 3.5 Units Actual Hours Actual Rate 5600 $3.3 $18,200 3750 Required 1: For direct materials a. Compute the price and quantity variances. Price Variance $15,000 =(D40C48)*C47 Quantity Variances $9,375 =E40*C66E49 Favorable Favorable b. Woud you recommend the compay sign the contract? Yes, the contract labor should be signed. Required 2 : For direct labor a. Compute the rate and efficiency variances. Rate Variances $2,800 =(D41C56)*C55 Efficiency Variances $1,575 =C57E41*C66 Favorable Unfavorable b. Would you recommend that the new labor mix be continued? Explain. Yes 3. For variable MOH Rate Variances Efficiency Variances $1,400 =(D42C63)*C62 $175 =E42*C66C64 Favorable Favorable Problem 10-14 Basic Variance Analysis 1. For direct materials: a. Compute the price and quantity variances Standard Standard price or Quantity rate Direct Materials 2.5 ounces 20.00 per ounce Standard cost $50 Material price variance Material quantity variance Material Price Variance = (AP - SP) AQ AP = Actual unit price of materials SP = Standard unit price of materials AQ = Actual quantity of materials purchased Material purchased Cost -$15,000 12000 ounces 225000 Material price variance Material quantity variance = (AQ - SQ) SP AQ = Actual quantity of materials put into production SQ = Standard quantity allowed for the output produced SP = Standard unit price of materials units produced SQ 3750 9375 Opening stock + Purchases - Closing stock put into production $15,000 favorable Material quantity variance $2,500 $2,500 Unfavorable b. Would you recommend that the company sigh the contract? Explain. Yes, the contract shall be signed. The new price of $18.75 per ounce is lower than the old price of $20.00 per ounce, resulting in a favorable price variance of $15,000 for the month. The material from the new supplier appears to cause little in production as shown by the small materials quantity variance (-$2,500) for the month. 2. For direct Labor: Direct Labor Standard Standard price or Standard Quantity rate cost 1.4 hours $12.50 per hour $17.50 a. Compute the rate and efficiency variances. Labor Rate variance 160 hours worked in November by 35 workers each at $12 per hour LRV = (AR - SR) AH -$2,800 LRV = Labor rate variance SR = Standard labor rate AH = Actual labor hours worked AR = Actual labor rate Labor Rate variance $2,800 Favorable Labor Efficiency variance LEV = (AH - SH) SR $4,375 LEV = Labor efficiency variance AH = Actual labor hours worked SH = Standard hours allowed for the output produced SR = Standard labor rate Labor Efficiency Variance $4,375 Unfavorable b. Would you recommend that the new labor mix be continued? The new labor mix should not be continued. Although it reduces the average hourly labor cost from $12.50 to $12.00 and saved $2800, this benefit is less than the large unfavorable labor efficiency variance ($4,375) for the month. 3. Variable overhead rate VOH Man OH Standard Standard price or Standard Quantity rate cost 1.4 hours $3.50 per hour $4.90 a. Compute the variable overhead rate and efficiency variances. Variable Overhead Rate variance Variable manufacturing overhead costs during November totaled $18,200. VOH Rate Variance = AH x (AVR - SVR) -$1,400 AH = actual lab hours AVR = actual variable-overhead rate = actual variable overhead AH SVR = standard variable-overhead rate Variable Overhead Efficiency variance VOH efficiency variance = SVR x (AH - SH) AH = actual machine hours SH = standard machine hours SVR = standard variable-overhead rate Variable OH Efficiency Variance Variable OH Rate Variance $1,400 Favorable b. What relation can you see between this efficiency variance and the labor efficiency variance? There is a corelation between Variable Overhead efficiency variance and labor efficiency variance Because both of them are computed by comparing actual labor-hours to standard labor-hours. Thus, if the labor efficiency variance is unfavorable, then the variable overhead efficiency variance will be unfavorable as well. $1,225 $1,225 Unfavorable 0 12000 2500 9500 Problem 10-14 Basic Variance Analysis 1. For direct materials: a. Compute the price and quantity variances Standard Standard price or Quantity rate Direct Materials 2.5 ounces 20.00 per ounce Standard cost $50 Material price variance Material quantity variance Material Price Variance = (AP - SP) AQ AP = Actual unit price of materials SP = Standard unit price of materials AQ = Actual quantity of materials purchased Material purchased Cost -$15,000 12000 ounces 225000 Material price variance Material quantity variance = (AQ - SQ) SP AQ = Actual quantity of materials put into production SQ = Standard quantity allowed for the output produced SP = Standard unit price of materials units produced SQ 3750 9375 Opening stock + Purchases - Closing stock put into production $15,000 favorable Material quantity variance $2,500 $2,500 Unfavorable b. Would you recommend that the company sigh the contract? Explain. Yes, the contract shall be signed. The new price of $18.75 per ounce is lower than the old price of $20.00 per ounce, resulting in a favorable price variance of $15,000 for the month. The material from the new supplier appears to cause little in production as shown by the small materials quantity variance (-$2,500) for the month. 2. For direct Labor: Direct Labor Standard Standard price or Standard Quantity rate cost 1.4 hours $12.50 per hour $17.50 a. Compute the rate and efficiency variances. Labor Rate variance 160 hours worked in November by 35 workers each at $12 per hour LRV = (AR - SR) AH -$2,800 LRV = Labor rate variance SR = Standard labor rate AH = Actual labor hours worked AR = Actual labor rate Labor Rate variance $2,800 Favorable Labor Efficiency variance LEV = (AH - SH) SR $4,375 LEV = Labor efficiency variance AH = Actual labor hours worked SH = Standard hours allowed for the output produced SR = Standard labor rate Labor Efficiency Variance $4,375 Unfavorable b. Would you recommend that the new labor mix be continued? The new labor mix should not be continued. Although it reduces the average hourly labor cost from $12.50 to $12.00 and saved $2800, this benefit is less than the large unfavorable labor efficiency variance ($4,375) for the month. 3. Variable overhead rate VOH Man OH Standard Standard price or Standard Quantity rate cost 1.4 hours $3.50 per hour $4.90 a. Compute the variable overhead rate and efficiency variances. Variable Overhead Rate variance Variable manufacturing overhead costs during November totaled $18,200. VOH Rate Variance = AH x (AVR - SVR) -$1,400 AH = actual lab hours AVR = actual variable-overhead rate = actual variable overhead AH SVR = standard variable-overhead rate Variable Overhead Efficiency variance VOH efficiency variance = SVR x (AH - SH) AH = actual machine hours SH = standard machine hours SVR = standard variable-overhead rate Variable OH Efficiency Variance Variable OH Rate Variance $1,400 Favorable b. What relation can you see between this efficiency variance and the labor efficiency variance? There is a corelation between Variable Overhead efficiency variance and labor efficiency variance Because both of them are computed by comparing actual labor-hours to standard labor-hours. Thus, if the labor efficiency variance is unfavorable, then the variable overhead efficiency variance will be unfavorable as well. $1,225 $1,225 Unfavorable 0 12000 2500 9500