Required as per question above

Question 3 (see Problem 12-12 of the text) Becton Labs Ltd produces various chemical compounds for industrial use. One compound, called Fludex, is prepared by means of an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Direct Material Direct Labour Variable Manufacturing Overhead Standard Quantity 2.5 grams 1.4 hours 1.4 hours Standard Price or Rate 20.00 per gram 12.50 per hour 3.50 per hour Standard Cost 50.00 17.50 4.90 72.40 During November, the following activity was recorded by the company relative to production of Fludex: 1) Materials purchased, 12,000 grams at a cost of 225,000. 2) There was no beginning stock of materials on hand to start the month; at the end of the month, 2,500 grams of material remained in the warehouse unused. 3) 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 12 per hour. 4) Variable manufacturing overhead is assigned to Fludex on the basis of direct labour-hours. Variable manufacturing overhead costs during November totalled 18,200. 5) During November 3,750 good units of Fludex were produced. The company's management is anxious to determine the efficiency of the activities surrounding the production of Fludex. Required: a. 1. For materials used in the production of Fludex: 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 the company sign the contract? Explain. 2. For direct labour employed in the production of Fludex: 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 only 15 senior technicians and 20 assistants in order to save costs. Would you recommend that the new labour mix be continued? Explain. 3. Compute the variable overhead spending and efficiency variances. What relationship can you see between this efficiency variance and the labour efficiency variance