Need some help with this one, i got stuck prety early, what are rhe ancwers, and

Question

Need some help with this one, i got stuck prety early, what are rhe ancwers, and an explination would be great! thanks

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 or Rate $28.00 per ounce $13.00 per hour s 3.60 per hour Standard Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 2.50 ounces 0.50 hours 0.50 hours $ 70.00 6.50 1.80 $ 78.30 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 13,500 ounces at a cost of $361,800 b. There was no beginning inventory of materials; however, at the end of the month, 2,900 ounces of material remained in ending C. The company employs 21 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 4,200 units of Fludex. inventory 140 hours at an average pay rate of $11.50 per hour. during November totaled $4,400 Required 1. For direct materials a. Compute the price and quantity variances.

Explanation / Answer

1. Direct Material Variance Direct Material Price Variance Actual Quantity at actual cost 10600 lbs x $26.80 per lbs $284,080 Actual Quantity at standard cost 10600 lbs x $28.00 per lbs $296,800 Price Variance ($12,720) Favourable Direct Material Quantity Variance Actual Quantity at standard cost 10600 lbs x $28.00 per lbs $296,800 Standard Quantity at standard cost 10500 lbs x $28.00 per lbs $294,000 Quantity Variance $2,800 Unfavourable Direct Material Cost Variance Price Variance (A) ($12,720) Quanity Variance (B) $2,800 Cost Variance (A+B) ($9,920) Favourable (b). As the actual price is less than the standard price, the company can enter into a long term purchase contract with the new supplier. 2. Direct Labour Variance Direct Labour Rate Variance Actual hour at actual rate 2940 hrs x $11.50 per hr $33,810 Actual hours at standard rate 2940 hrs x $13.00 per hr $38,220 Price Variance ($4,410) Favourable Direct Labour Time Variance Actual time at standard rate 2940 hrs x $13.00 per hr $38,220 Standard time at standard rate 2100 hrs x $13.00 per hr $27,300 Quantity Variance $10,920 Unfavourable Direct Labour Cost Variance Rate Variance (A) ($4,410) Time Variance (B) $10,920 Cost Variance (A+B) $6,510 Unfavourable (b). The new Labour mix took more labour hour than the standard hours, thus the new labour mix is not recommendable 3. Factory Overhead Variance Variable overhead rate variance Actual Variable Overhead $4,400 Actual hours allowed x standard variable rate 2940 direct labour hour x $3.60 per hour $10,584 Variable overhead rate variance ($6,184) Favourable Variable overhead efficiency variance Actual hours allowed x standard rate 2940 hours x $3.60 per hour $10,584 Standard hours allowed x standard rate 2100 direct labour hrs x $3.60 per hour $7,560 Efficiency Variance $3,024 Unfavourable Factory Overhead Cost Variance Rate Variance (A) ($6,184) Favourable Efficiency Variance (B) $3,024 Unfavourable Cost Variance (A+B) ($3,160) Favourable Note: Standard Hour allowed 4200 units x 0.50 hr per unit = 2100 direct labour hrs

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