Becton Labs, Inc., produces various chemical compounds for industrial use. One c

Question

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 Fludex, as follows Standard Price or Rate $ 7.00 per ounce $15.00 per hour 3.50 per hour Standard Standard Quantity Cost Direct materials Direct labor Variable manufacturing overhead 1.30 ounces 0.80 hours 0.80 hours $ 9.10 12.00 2.80 $23.90 During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 7,400 ounces at a cost of $48,840 b. There was no beginning inventory of materials; however, at the end of the month, 2,850 ounces of material remained in ending inventory c. The company employs 12 lab technicians to work on the production of Fludex. During November, they worked an average of 170 hours at an average rate of $15.50 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $6,800 e. During November, 3,100 good units of Fludex were produced Required 1. For direct materials a. Compute the price and quantity variances. (Round your "price per ounce" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable and "None" for no effect (i.e., zero variance).) Variance Materials price variance Variance Materials quantity variance

Explanation / Answer

Ans) Becton Labs Inc. Standard Quantity Standard Price or rate Standard Cost Direct Material 1.3 Ounces $                7.00 Per Ounce $                   9.10 Direct Labour 0.8 Hours $              15.00 Per Hour $                 12.00 Variable Manufacturing Overhead 0.8 Hours $                3.50 Per hour $                   2.80 $                 23.90 Purchases 7400 Ounces Purchase Price $               48,840.00 Actual Purchase Price $                          6.60 Per Ounce Production in November 3100 Units Standard Quantity 4030 Ounces Actual Quantity 4550 Ounces 1(a) Material Price Variance=AQ(AP-SP) Material Price Variance=7400($6.60-$7) $               (2,960.00) (F) Material Quantity Variance=SP(AQ-SQ) Material Quantity Variance=$7(4550-4030) $                 3,640.00 (U) 1 (b) Yes 2(a) For Direct Labour Actual Hours = 12 Lab technicians*170 Hours Per technician Actual Hours= 2040 Standard Hours= 3224 Labour Rate Variance=AH(AR-SR) Labour Rate Variance=2040($15.50-$15) $                 1,020.00 (U) Labour Effciency Variance=SR(AH-SH) Labour Effciency Variance=15(2040-3224) $             (17,760.00) (F) 2(b) Yes 3(a) Variable Manufacturing Overhead cost $6,800 Actual Hours 2040 Actual Overhead Rate $3.33 Per Hour Variable Overhead Rate Variance=AH(AR-SR) Variable Overhead Rate Variance=2040($3.33-$3.50) $                   (346.80) (F) Variable Overhead Efficiency Variance=SR(AH-SH) Variable Overhead Efficiency Variance=$3.50(2040-3224) $               (4,144.00) (F)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.