Question

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 Standard Price Standard or Hours or Rate Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.40 ounces 0.70 hours 0.70 hours 18.00 per ounce $43.20 9.80 s 3.00 per hour 0 14.00 per hour 2.10 $55.10 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $198,000. b. There was no beginning inventory of materials; however, at the end of the month, 3,200 ounces of material remained in ending c The company employs 20 lob techniclans 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 overheed costs e. During November, the company produced 3,600 units of Fludex. inventory 160 hours at an average pay rate of $12.00 pet hour. during November totaled $4,800. 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 20 technicians employed in the production of Fludex consisted of 5 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 Req 1A Req 18 Req 2A Req 2B Req 3 < Prey 5 of 9İİİ Next >

Answer 1

nte Favourable Unfavon ra ble Moltenal Rice Variance-一11/32001P) Matenal Quaut'ty Varian L -$28801 ) etehare Consu med o0 32D0 2000 18-165) B00 dard uchon ro duch'on Standard Quonh ty tattual-Production CL Attual Ouanh'れ つー12000-3200 bo6 2 て3640, 8300) x 18