Becton Labs, Incorporated, produces varlous 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 Materlals purchased, ounces at a cost of $
b There was no beginning inventory of materlals; however, at the end of the month, ounces of materlal remalned in ending
Inventory.
c The company employs lab techniclans to work on the production of Fludex. During November, they each worked an average of
hours at an average pay rate of $ per hour.
d Varlable manufacturing overhead is assigned to Fludex on the basis of direct laborhours. Varlable manufacturing overhead costs
during November totaled $
e During November, the company produced units of Fludex.
Required:
For direct materlals:
a Compute the price and quantity varlances.
b The materlals were purchased from a new supplier who is anxious to enter Into a longterm purchase contract. Would you
recommend that the company sign the contract?
For direct labor:
a Compute the rate and efficlency varlances.
b In the past, the technicians employed in the production of Fludex consisted of senior techniclans and 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?
Compute the varlable overhead rate and efficiency varlances.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Compute the variable overhead rate and efficiency variances. Indicate the effect of each variance by selecting for
favorable, for unfavorable, and "None" for no effect ie zero variance Input all amounts as positive values.
