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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

or HoursStandard Price

or RateStandard CostDirect materials2.10ounces$24.00per ounce$50.40Direct labor0.40hours$14.00per hour 5.60Variable manufacturing overhead0.40hours$2.50per hour 1.00Total standard cost per unit     $57.00

 

During November, the following activity was recorded related to the production of Fludex:

 

  1. Materials purchased, 11,500 ounces at a cost of $259,325.
  2. There was no beginning inventory of materials; however, at the end of the month, 2,700 ounces of material remained in ending inventory.
  3. The company employs 23 lab technicians to work on the production of Fludex. During November, they each worked an average of 100 hours at an average pay rate of $11.00 per hour.
  4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $2,300.
  5. During November, the company produced 4,100 units of Fludex.

 

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 23 technicians employed in the production of Fludex consisted of 4 senior technicians and 19 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.

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All the variances with... View the full answer

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The variances... View the full answer

New Doc 2020-01-01 13.11.57_1.jpg

Becton labs, Inc.,
Price variance = Actual quantity / Standred - Actual poll
-lesed (on event) I Rate perounce per ounce
= (11500-2700) / 24 - 259325
11500
1. X
8800 24 - 22.55
$ 127 60 Jaworcable...

New Doc 2020-01-01 13.11.57_2.jpg

since, the material price variance in loveusable
land material quantity variance in yumalovover,
Have can say ,
that the contrast weiss be
good in
terms of finance but not
on quality basis . It to...

New Doc 2020-01-01 13.11.57_3.jpg

New Doc 2020-01-01 13.11.57_4.jpg

labor ilbiciency viviance = Standard Standard - Actu.
Rate Chaves
= $14 60.40 * 4100 ) - 2300
= $14 1640-2300
= $ 9240 unfavourable
" Standard = ( Standsed Rate X Actual units produced )...

New Doc 2020-01-01 13.11.57_5 (1).jpg

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