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 unit of Fludex, as follows: Standard Quantity 2.20 ounces Standard Price or Rate $25.00 per ounce Standard Cost $ 55.00 Direct materials Direct labor 0.50 hours $15.00 per hour 7.50 Variable manufacturing overhead 0.50 hours $ 3.00 per hour 1.50 $ 64.00 During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $282,000. b. There was no beginning inventory of materials; however, at the end of the month, 2,750 ounces of material remained in ending inventory. c. The company employs 25 lab technicians to work on the production of Fludex. During November, they worked an average of 110 hours at an average rate of $11.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $2,400. e. During November, 4,100 good units of Fludex were produced . Required:

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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?
O Yes
O No
2. For direct labor:
a. Compute the rate and efficiency 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).)
Labor rate variance
Labor efficiency variance
b. In the past, the 25 technicians employed in the production of Fludex consisted of 5 senior technicians and 20 assistants. During November, the company experimented with fewer senior technicians and more
assistants in order to save costs. Would you recommend that the new labor mix be continued?
O Yes
O No
3. Compute the variable overhead rate and efficiency 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).)
|Variable overhead rate variance
Variable overhead efficiency variance
Transcribed Image Text: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? O Yes O No 2. For direct labor: a. Compute the rate and efficiency 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).) Labor rate variance Labor efficiency variance b. In the past, the 25 technicians employed in the production of Fludex consisted of 5 senior technicians and 20 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to save costs. Would you recommend that the new labor mix be continued? O Yes O No 3. Compute the variable overhead rate and efficiency 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).) |Variable overhead rate variance Variable overhead efficiency variance
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
$25.00 per ounce
Standard
Standard Quantity
2.20 ounces
Cost
$ 55.00
Direct materials
$15.00 per hour
$ 3.00 per hour
Direct labor
0.50 hours
7.50
Variable manufacturing overhead
0.50 hours
1.50
$ 64.00
During November, the following activity was recorded relative to production of Fludex:
a. Materials purchased, 12,000 ounces at a cost of $282,000.
b. There was no beginning inventory of materials; however, at the end of the month, 2,750 ounces of material remained in ending inventory.
c. The company employs 25 lab technicians to work on the production of Fludex. During November, they worked an average of 110 hours at an average rate of $11.50 per hour.
d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $2,400.
e. During November, 4,100 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
Transcribed Image Text: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 $25.00 per ounce Standard Standard Quantity 2.20 ounces Cost $ 55.00 Direct materials $15.00 per hour $ 3.00 per hour Direct labor 0.50 hours 7.50 Variable manufacturing overhead 0.50 hours 1.50 $ 64.00 During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $282,000. b. There was no beginning inventory of materials; however, at the end of the month, 2,750 ounces of material remained in ending inventory. c. The company employs 25 lab technicians to work on the production of Fludex. During November, they worked an average of 110 hours at an average rate of $11.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $2,400. e. During November, 4,100 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
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