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Problem 10-14 Basic Variance Analysis [LO10-1, LO10-2, LO10-3] Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using

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Problem 10-14 Basic Variance Analysis [LO10-1, 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 $23.00 per ounce $12.00 per hour $ 3.00 per hour Standard Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.20 ounces 0.70 hours 0.70 hours $50.60 8.40 2.10 $61.10 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 11,000 ounces at a cost of $237,600 b. There was no beginning inventory of materials; however, at the end of the month, 2,650 ounces of material remained in endingg c. The company employs 18 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 3,750 units of Fludex inventory 190 hours at an average pay rate of $10.50 per hour. during November totaled $6,200 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

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