Monday by 11:59pm Points 7.7 Submitting a text entry box or a file upload PROBLEM 10-14 Basic Variance Analysis L010-1L010-2, L010-3 Becton Labs, Inc. produces various chemical compounds for industriale One compound, called Fludex, is prepared bingun elaborate distilling process. The company has developed standard costs for one unit of ludex as follows: Standard Cost Standard Quantity Standard Price or Hours or Rate Direct materials 25 ounces $20.00 per ounce Direct labor 1.4 hours $22.50 per hour Variable manufacturing overhead 14 hours $3.50 per hour $50.00 31.50 4.90 $86.40 Total standard cost per unit During November, the following activity was recorded related to the production of Fludes Materials purchased, 12,000 ounces at a cost of $225,000 b. There was no beginning investory of materials, however, at the end of the month, 2,500 ounces of material remained in ending inentory c. The company employs 35 lab technicians to work on the production of Fluidex. During November, they each worked an average of 160 hours at an average pay rate of $22 per hour d. Variable manufacturing overhead is assigned to Flades on the basis of direct labor hours. Variable manufacturing overhead costs during November totaled $18,200 e. During November, the company produced 3.750 units of Fladex Required: 1. For direct material Compute the price and quantity variances b. The materials were purchased from a new supplier who is scious to enter into a long term purchase contract. Would you recommend that the company sign the contract Explain 2. For direct labor Compute the rate and efficiency variances b. In the past, the 3 technicians employed in the production of Flades consisted of 20 senior technicians and 15 min. Du November, the company experimented with fewer senior technicians and more attistants in order to reduce labor costs. Would you recommend that the new labor mix be continued Explain 3. Compute the variable overhead rate and efficiency variances. What relation can you see between this time race and the labor Previous 3 a *** I PROBLEM 10-14 Basic Variance Analysis CL010-1.1010-2, L010-3 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 Fladex, as follows: Page 469 Standard Cost $50.00 Standard Quantity Standard Price or Hours or Rate Direct materials 2.5 ounces $20,00 per ounce Direct labor 1.4 hours $22.50 per hour Variable manufacturing overhead 1.4 hours $3.50 per hour Total standard cost per unit 31.50 4.90 $86.40 During November, the following activity was recorded related to the production of Fludex a Materials purchased, 12,000 ounces at a cost of $225,000 b. There was no beginning inventory of materials, however, at the end of the month, 2,500 ounces of material remained in ending inventory c. The company employs 35 lab technicians to work on the production of Fladex During November, they each worked an average of 160 hours at an average pay rate of $22 per hour. 4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor hours. Variable manufacturing overhead costs during November totaled $18,200 c. During November, the company produced 3,750 units of Fladex. 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? Explain. 2. For direct labor a. Compute the rate and efficiency variances b. In the past, the 35 technicians employed in the production of Fludex consisted of 20 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? Explain. 3. Compute the variable overhead rate and efficiency variances. What relation can you see between this efficiency variance and the labor efficiency variance