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 Quantity or Hours Standard Price Standard or Rate $23.00 per ounce $14.00 per hour $ 2.50 per hour Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.20 ounces 0.60 hours 0.60 hours $50.60 8.40 1.50 $60.50 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $259,800 b. There was no beginning inventory of materials; however, at the end of the month, 3,100 ounces of material remained in ending c. The company employs 25 lab technicians to work on the production of Fludex. During November, they each worked an average of d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs e. During November, the company produced 4,000 units of Fludex. inventory 130 hours at an average pay rate of $12.00 per hour. during November totaled $4,200

Explanation / Answer

1) for direct materials a. price and quantity variance Standard - Actual * Actual = Variance price price quantiy materials price variance 23 21.65 12,000 = 16200 F standard - Actual * Standard = Variance qty qty price materials quantity variance 8800 8,900 23 2300 U b. yes 2) for direct labor Standard - Actual * Actual = Variance rate rate hours labor price variance 14 12 3250 = 6500 F standard - Actual * Standard = Variance hours hours rate labor efficiency variance 2400 3,250 14 11900 U b. no 3) for variable overhead Standard - Actual * Actual = Variance rate rate hours Variable overhead rate 2.5 1.29 3,250 = 3925 F standard - Actual * Standard = Variance hours hours rate variable overhead efficiency 2400 3,250 2.5 2125 U

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