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 Price or Rate $22.00 per ounce $15.00 per hour S 2.50 per hour Standard $46.20 2.00 Standard Quantity Cost Direct materials Direct labor Variable manufacturing overhead 2.10 ounces 0.80 hours 0.80 hours 60.20 During November, the following activity was recorded relative to production of Fludex a. Materials purchased, 10,500 ounces at a cost of $216,825 b. There was no beginning inventory of materials; however, at the end of the month, 2,600 ounces of material remained in ending inventory c. The company employs 20 lab technicians to work on the production of Fludex. During November, they worked an average of 180 hours at an average rate of $14.00 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $7,000 e. During November, 3,700 good units of Fludex were produced Required 1. For direct materials a. Compute the price and quantity variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) Materials price variance Materials quantity variance