Problem 10-14 (Static) Basic Variance Analysis [LO10-1, LO10-2, LO10-3] Becton Labs, Incorporated, 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 each worked an average of 160 hours at an average pay rate of $22 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $18,200. e. During November, the company produced 3,750 units of Fludex. 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? 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 reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. 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? 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 reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. For direct materials, compute the price and quantity variances. (Indicate the effect of each variance by selecting " F " for favorable, "U" for unfavorable, and "None" for no effect (l.e, zero variance). Input all amounts as positive values.) 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 comparry sign the contract? 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 fower senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. For direct mijterials, the materials were purchased from a new supplier who is anxious to enter into a long-term purchase cantract. Would you recommend that the company sign the contract? Required: 1. For direct materials: a. Compute the price and quantry variances. b. The materials were purchased from a new supplier who is aroious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 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 techniclans and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. For direct iabor, campute the rate and effidency variances. (Indicate the effect of esch varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (Me., zero variance), Input all amounts as positive values.) Required: 1. For-direct moterials: a. Compute the price and quantity varlances. 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? 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 reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. For direct laboc, in the past, the 35 technicians employed in the production of Fludex consisted of 20 senior techniclans and is assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs, Would you recommend that the new labor mix be continued? 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 slign the contract? 2. For direct labor: a. Compute the rate and efficiency varlances. b. In the past, the 35 technicians employed in the production of Fludex consisted of 20 senior techinicians and 15 assistants. During November, the company experimented with fewer senior techniclans and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the varioble overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Compute the variable overhead rate and efficiency varlances. (Indicate the effect of each variance by selecting " F " for favorable, "U. for unfavorable, and "None" for no effect (1.9, zero variance), Input all amounts as positive values.)
