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PROBLEM 10-14 Basic Varlance Analysis @L010-1,@L010-2, L010-3 Becton Labs, Inc, proctuces various chemical compounds for industrial use. Our compound, called Fladen, in prepared ming an elaborate distilling process. The company has developed standard costs for one unit of Flodes, as follow Page 409 Standard Quantity Standard Price Standard or Hours or Rate Cou Direct materials 2.5 ounces $20.00 per once $50.00 Direct labor 14 hours $22.50 per hour 31.50 Variable manufacturing overhead 1.4 hours $3.50 4.90 Total standard cost per unit $86.40 per hour During November, the following activity was recorded related to the production of Fudex 2. Materials purchased. 12,000 ounces at a cost of $225,000 b. There was no beginning inventory of materiale: however, at the end of the month, 2,500 ounces of material remained in ending investory: c. The company employs 35 lab technicians to work on the production of Fludex. During November, they each worked an average of 160 hours at an age pas rate of $22 per hour Variable manufacturing overhead is assigned to Fladex on the basis of direct labor hours. Variable manufacturing overhead cons during November totaled $18,200 . During November, the company produced 3,750 units of Fladex Required: 1. For direct materials . Compute the price and quantity variances D. 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 . Compute the rate and efficiency variances b. In the past the 35 technicians employed in the production of Pludex consisted of 20 senior technicians and is asistants. During November the company experimented with fewer senior technicians and more att starts in order to reduce labor costs. Would you recommend that the new labor mix be continued? Explain. 3. Compute the variable overhead tate and efficiency variances What relation can you see between this efficiency variance and the labor ciency variance