Problem $10-14($Static$)$ Basic Variance Analysis $[$LO$10-1,$ LO$10-2,$ LO$10-3]$

Becton Labs, Incorporated, produces varlous chemical compounds for Industrlal 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 actlvity was recorded related to the production of Fludex:

a$.$ Materlals purchased, $12,000$ ounces at a cost of $$225,000.$

b$.$ There was no beginning Inventory of materlals; however, at the end of the month, $2,500$ ounces of materlal remained in ending

Inventory.

c$.$ The company employs $35$ lab technlclans to work on the production of Fludex. During November, they each worked an average of

$160$ hours at an average pay rate of $$22$ per hour.

d$.$ Varlable manufacturing overhead is assigned to Fludex on the basls of direct labor$-$hours. Varlable manufacturing overhead costs

during November totaled $$18,200.$

e$.$ During November, the company produced $3,750$ units of Fludex.

Requiled:

For direct materlals:

a$.$ Compute the price and quantity varlances.

b$.$ The materlals were purchased from a new supplier who Is anxlous to enter Into a long$-$term purchase contract. Would you

recommend that the company sign the contract?

For direct labor:

a$.$ Compute the rate and efficlency varlances.

b$.$ In the past, the $35$ techniclans employed in the production of Fludex consisted of $20$ senlor techniclans and $15$ assistants. During

November, the company experimented with fewer senlor techniclans and more assistants in order to reduce labor costs. Would you

recommend that the new labor $mlx$ be continued?

Compute the varlable overhead rate and efficlency varlances.

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

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.$)$