4. value: 5.00 points Becton Labs, Inc., produces various chemical compounds for

Question

4. value: 5.00 points Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distlling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Price or Rate s 7.00 per ounce $12.00 per hour s 3.00 per hour Standard Standard Quantity Cost Direct materials Direct labor Variable manufacturing overhead 0.70 hours 1.80 ounces 0.70 hours $ 12.60 8.40 2. 10 23.10 During November, the following activity was recorded relative to production of Fludex a. Materials purchased, 9,900 ounces at a cost of $58,410. b. There was no beginning inventory of materials; however at the end of the month, 2 150 ounces of b. There was no beginning inventory of materials; however at t 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 190 hours at an average rate of $12.50 per hour d. Variable manufacturing overhead is assigned to Fludex on the basis on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $6.200 e During November, 4,100 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 pna Noned tor no fect o r arnce yting F for rble. places. Indicate the effect of each variance by selecting F for favorable. "U" for unfavorable, for and None" for no effect i e.. zero variance ye' cung for favorable, U for unfavorable Vana Materials price variance Varia

Explanation / Answer

4) Material price variance = ( AR - Std rate ) Actual qty purchased                                                 = ( 5.90 - 7) 9,900 (58,410/9900 = 5.90)                                                 =10,890(F) Material efficiency variance = ( AQ used - SQ ) Std rate                                                          =(7,750- 1.8*4,100) (9900 - 2,150 =7750)                                                         = (7,750 - 7380)7                                                         = 2,590 (U) B) yes since price material variance is favourable 2) direct labor rate variance = (AR - SR ) AH                                                           =(12.50 -12.00) 12*190                                                            = (.50 )2280                                                           =1,140(U) Direct material efficiency variance = (AH - SH ) SR                                                                          =(2,280 - 4,100*.7 ) 12                                                                        = 7,080(F) b) yes c) Variable overhead spending variance = (AR - SR ) AH                                                                                   =(6,200 - 3*2280)                                                                                  =640(F) Variable overhead efficiency variance = (AH - SH ) SR                                                                                = (2,280 - 2,870) 3                                                                                =1,770(F) 5) predetermined overhead rate = (2.40 + 384,000/60,000)   = $8.8 per hour Variable rate                                     = 2.40 per hour Fixed rate                                           =6.40 per hour Standard cost Direct materials 4 pounds at $4 per pound $16 direct labor 1.5 DLH at 12.2 per DLH 18.3 Variable OH 1.5 DLH"Sat 2.4 per dlh 3.6 Fixed OH 1.5 DLH's at 6.4 per DLH 9.6 Standard cost per unit $48 3a) Standard direct labor hours allowed 72000 Manufactuing overheas T -Account actual variable OH 124,800 applied Actual fixed OH 429,000 Variable 187,200 Fixed 307,200 Balance 59,400 4)Variable overhead rate variance = (SR - AR ) AH                                                                          =(2.40 * 78,000 - 124,800)                                                                        =62,400 (F) Variable overhead efficiency           -= (AH - SH ) SR                                                                        =(78,000 -72,000) 2.4                                                                         =14,400(U) Fixed overhead budget variance = Actual - budgeted                                                                    =429,000 - 384,000                                                                    =45,000(U) Fixed overhead volume variance = actual outpuT - budgeted)overhead rate                                                                   = (48000 - 40,000) 9.6                                                                   =76,800(U)

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