***JUST REQUIREMENTS 1A, 2A, AND 3***
9 Problem 10-14 Basic Variance Analysis L010-1, LO10-2, LO10-3] 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 or Hours Standard Price or Rate $21.00 per ounce $12.88 per hour S 2.00 per hour Standard points Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.00 ounces 8.98 hours 0.90 hours $ 42.00 10.80 1.80 54.60 eBook References During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 10,000 ounces at a cost of $197,000. b. There was no beginning inventory of materials; however, at the end of the month, 2,550 ounces of material remained in ending C. The company employs 24 lab technicians to work on the production of Fludex. During November, they each worked an average of d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs e. During November, the company produced 3,700 units of Fludex. inventory 170 hours at an average pay rate of $11.50 per hour during November totaled $4,800 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? 2. For direct labor a. Compute the rate and efficiency variances. b. In the past, the 24 technicians employed in the production of Fludex consisted of 6 senior technicians and 18 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? polnts Book 3. Compute the variable overhead rate and efficiency variances References Complete this question by entering your answers in the tabs below Req 1A Req18 Req 2A Req 2B Req 3 For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting "F for favorable, "Ut" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Materials price variance Materials quantity variance 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 24 technicians employed in the production of Fludex consisted of 6 senior technicians and 18 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. points Complete this question by entering your answers in the tabs below eBook References Req 1AReq 18 Req 2AReq 2B Req 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 (i.e., zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance Req1B Req 2B 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 24 technicians employed in the production of Fludex consisted of 6 senior technicians and 18 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. points Complete this question by entering your answers in the tabs below. eBook Req 1A Req 18 Req 2A Req 28 Req 3 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.) Variable overhead rate variance Variable overhead efficiency variance KReq 2B Req 3
