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Problem 11-14 Basic Variance Analysis (LO11-1, LO11-2. LO11-3] Becton Labs, Inc. produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using
Problem 11-14 Basic Variance Analysis (LO11-1, LO11-2. LO11-3] Becton Labs, Inc. produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate disting process. The company has developed standard costs for one unit of Fiudex as follows Standard Price Standard Standard antity Direct materials 210 CS 52400 per onge $50.40 Direct labor 0.40 hours $ 1400 per hour 5.60 Variablementaturing overhead 0.40 hours $ 2.50 por hour During November, the following activity was recorded relative to production of Fox a. Materials purchased 11 500 Ounces at a cost of $259.326 b. There was no boginning inventory of materiais, however at the end of the month 2,700 Ounces of material remained in onding inventory c. The company employs 23 labs technicians to work on the production of Fudex During November, they worked on average of 100 hours at an average rate of $11.00 per hour. d. Variable manufacturing overheads assigned to Fluox on the basis of direct labor-hours. Variable manufacturing overhead coats Curing November totalad 52 300 o. During November, 4.100 good units of Fiudex were produced Required: 1. For direct materials a. Compute the price and quantity variances, input all amount as positive values. Indiose the foot of each varianor by chong for favorabia, " for unfavorable, and "None" for no effect ( zoro variance. Matinis price variant Matras quantity variance b. The materials were purchased from a new supplier who is anxious to enter a long to purchase contract. Would you recommend that the company in the contract? 2. For direct labor a. Compute the rate and efficiency variances, Input all amounts as positive valuab, indicate the foot of halanga by soleating for favorable for unfavorable and No o r no acepti.. re varianoel. Labor varlano Labor oficiency variance D. In the past, the 23 technicians employed in the production of Fludex consisted of 4 senior lachnicians and 19 assistants. During November, the company experimented with fewer senior ochnicians and more Assistants in order to save costs. Would you recommend that the new labor my be continued? 3. Compute the variable overhead rate and efficiency variances (input all amounts as positive value. ndioate the foot of onch varianon by creating for favorable, " for unfavorable, and "None for no effect (L., zoro variance Variable overhead at varlang Variable overhead cancy variano
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