Upon checking my work: Materials price variance is not $4096, however it is still favorable. Materials quantity variance is not $204, 068, nor is it favorable. Still the purchase contract answer is yes. Everything after that is incorrect, except Labor rate variance is favorable. The question is also incomplete.

Becton Labs Inc. produces various chemical compounds for industrial use. One compound, called Fludex, is prepared by means of an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:

Direct materials2.50mL at$$23per millilitreDirect labour1.40hours at$16.50per hourVariable overhead1.40hours at$7.50per hour

During November, the following activity was recorded by the company relative to production of Fludex:

1. Materials were purchased, 12,320 millilitres at a cost of $260,568.
2. There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,500 millilitres of material remained in the warehouse unused.
3. The company employs 35 lab technicians to work on the production of Fludex. During November, each worked an average of 160 hours at an average rate of $16 per hour.
4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labour-hours. Variable manufacturing overhead costs during November totalled $39,960.
5. Fixed overhead is also allocated on the basis of direct labour-hours. The company had budgeted $14,000 for the month but underapplied it by $475.
6. During November, 3,830 good units of Fludex were produced. The normal volume for the month is 4,000 good units.

The companys management is anxious to determine the efficiency of the activities surrounding the production of Fludex. The companys policy is to investigate any variance more than 2% different from the relevant standard.

Required:

1. For materials used in the production of Fludex:

a. Compute the price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

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?

multiple choice 1

Yes Correct

No

2. For direct labour employed in the production of Fludex:

a. Compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

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 only 15 senior technicians and 20 assistants in order to save costs. Would you recommend that the new labour mix be continued?

multiple choice 2

Yes Incorrect

No

3-a. Compute the variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

3-b. This part of the question is not part of your Connect assignment.

4. Compute the fixed overhead cost variances for November. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)