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:
During November, the following activity was recorded related to
the production of Fludex:
There was no beginning inventory of materials; however, at the
end of the month, 3,000 ounces of material remained in ending
inventory.
The company employs 26 lab technicians to work on the production
of Fludex. During November, they each worked an average of 150
hours at an average pay rate of $14.00 per hour.
Variable manufacturing overhead is assigned to Fludex on the
basis of direct labor-hours. Variable manufacturing overhead costs
during November totaled $8,000.
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 26 technicians employed in the production of
Fludex consisted of 4 senior technicians and 22 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.
- Becton Labs Incorporated Produces Various Chemical Compounds For Industrial Use One Compound Called Fludex Is Prepa 1 (69.99 KiB) Viewed 25 times
3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 For direct materials, 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? Yes No < Req 1A Req 2A >
3. Compute the variable overhead rate and efficiency variances. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 For direct labor, compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Labor rate variance Labor efficiency variance < Req 1B Req 2B >
Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 In the past, the 26 technicians employed in the production of Fludex consisted of 4 senior technicians and 22 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? Yes No < Req 2A Req3 >
Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Req 2B Req 3 Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Variable overhead rate variance Variable overhead efficiency variance < Req 2B Req3 >