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ecton Labs Inc. produces various chemical compounds for industrial use. One compound, called Fludex, is prepared by means of laborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: During November, the following activity was recorded by the company relative to production of Fludex: a. Materials were purchased, 12.120 mililitres at a cost of $238,158. b. 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 c. 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 $14 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labour-hours. Variable manufacturing overhead costs during November totalled $26,360. e. Fixed overhead is aiso allocated on the basis of direct labourchours. The company had budgeted Si4,000 for the month but underapplied it by $600 1. During November, 3,780g00d units of Fludex were producec: The noimal volume for the month is 4,000g000l units. The company's management is anxious to determine the efficiency of the activities surrounding the production of Fludex. The company's policy is to investigate any variance more than 2% different from the relevant stancard Recuired: 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? Yes 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 fovourable, "U" for unfavourable, and "None" for no effect (Le., zero varionce).) November, the company experimented with only 15 senior techniciars consisted of 20 senjor technicians and 15 assistants. During that the new labour m be continued? Yes No 3-. Compute the variable overhead spending and efficiency variances. (indicate the effect of each varionce by salecting "F" for fovourable, "U" for unfavourable, and "None" for no effect (li.e., zero voriancel).) 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 fovourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

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