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 $39.10 7.80 s 2.50 per hour1.50 $48.40 or Rate $17.00 per ounce $13.00 per hour Cost Direct naterials Direct labor Variable manufacturing overhead Total standard cost 2.30 ounces 0.60 hours 0.60 hours per unit During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 11,500 ounces at a cost of $178,825 b. There was no beginning inventory of materials; however, at the end of the month, 3,150 ounces of material remained in ending C. The company employs 17 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 3,500 units of Fludex. inventory 160 hours at an average pay rate of $11.50 per hour during November totaled $3,000.

Explanation / Answer

1) for direct materials a. price and quantity variance Standard - Actual * Actual = Variance price price quantiy materials price variance 17 15.55 11500 = 16675 F standard - Actual * Standard = Variance qty qty price materials quantity variance 8050 8350 17 5100 U b. yes 2) for direct labor Standard - Actual * Actual = Variance rate rate hours labor price variance 13 11.5 2720 = 4080 F standard - Actual * Standard = Variance hours hours rate labor efficiency variance 2100 2,720 13 8060 U b. no 3) for variable overhead Standard - Actual * Actual = Variance rate rate hours labor price variance 2.5 1.10 2720 = 3800 F standard - Actual * Standard = Variance hours hours rate labor efficiency variance 2100 2,720 2.5 1550 U

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