Problem 10-14 (Static) Basic Variance Analysis [LO10-1, LO10-2, LO10-3] Becton Labs, Incorporated, 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 af clu was... follows: vuning rovember, the following activity was recorded related to the production of Fludex: a. Moterials 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 Fludex. During November, they each worked an overage of 160 hours at an werage pay rate of $22 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overthead costs during November totaled $18,200. e. During November, the company produced 3,750 units of Fludex. 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 Fludex. 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 Fludex on the basis of direct labor-hours. Varlable manufacturing overhead costs during November totaled $18,200. e. During November, the company produced 3,750 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 35 technicians employed In the production of Fludex consisted of 20 senlor technicians and 15 assistants. During November, the company experimented with fewer senior tectinicians 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 vatiances. Complete this question by entering your answers in the tabs below