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My question is attached below. There are two. I'm not really sure how to do them at all. PROBLEM 10-14 Basic Variance Analysis Becton Labs,

My question is attached below. There are two. I'm not really sure how to do them at all.

image text in transcribed PROBLEM 10-14 Basic Variance Analysis 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: During November, the following activity was recorded related to the 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. 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? Explain. 2. For direct labor: a. Compute the rate and efficiency variances. 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? Explain. 3. Compute the variable overhead rate and efficiency variances. What relation can you see between this efficiency variance and the labor efficiency variance? PROBLEM 10-15 Comprehensive Variance Analysis Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to \"get things under control.\" Upon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: During June the plant produced 15,000 pools and incurred the following costs: a. Purchased 60,000 pounds of materials at a cost of $1.95 per pound. b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 11,800 direct laborhours at a cost of $7.00 per hour. d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machinehours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. Removed Item not required for this assignment 3. Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these variances

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