Question
Part III Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company
Part III 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: Direct materials 1.3 ounces $5.70 per ounce $7.41 Direct labor .6 hours $11.60 per hour 6.9 Variable manufactur .60 hours $2.70 per hour 1.62 Overhead $15.99 The first column is standard quantity, second column standard price or rate, and the third one is standard cost. During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 9,420 ounces at a cost of $49,926. b. There was no beginning inventory of materials; however, at the end of the month, 1,600 ounces of material remained in ending inventory. c. The company employs 40 lab technicians to work on the production of Fludex. During November, they worked an average of 61.50 hours at an average rate of $12.30 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $5,658. e. During November, 4,600 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. Compute the price and usage variances. Requirement 2: For direct labor employed in the production of Fludex. Compute the price and usage variances.
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