×e Chogg Study | Gur × IAM Cloud-Auther × M Inbox (1,488)-dani × Google Docs ezt
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×e Chogg Study | Gur × IAM Cloud-Auther × M Inbox (1,488)-dani × Google Docs ezto.mheducation.com/hm.tpx 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: or Cost Direct materials Direct labor Variable manufacturing overhead0.70 houns 2.40 ounces 0.70 hours $18.00 per ounce43.20 $14.00 per hour s 3.00 per hour 9.80 2.10 $ 55.10 During November, the following activity was recorded relative to production of Fluderx: a. Materials purchased, 12,000 ounces at a cost of $198,000 b. There was no beginning inventory of materials: however, at the end of the month, 3,200 ounces of c. The company employs 20 lab technicians to work on the production of Fludex. During November, they d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable material remained in ending inventory. worked an average of 160 hours at an average rate of $12.00 per hour manufacturing overhead costs during November totaled $4.800. e. During November, 3,600 good units of Fludex were produced Required: 1. For direct materials: a. Compute the price and quantity variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) Materials price variance Materials quantity varianceExplanation / Answer
Material Price Variance
= Actual Qty x (Standard Price - Actual Price)
= 12,000 x ($18.00 - 16.50)
$18,000
Favorable
Material Quantity Variance
= Standard Price x (Standard Qty - Actual Qty)
= $18.00 x (8,640 - 8800)
-$2,880
Unfavorable
b. the material purchased from a new supplier, who is anxious to enter into long-term purchase contract. Would you recommend.
Yes- as the total material variance is favorable
Labor rate Variance
= Actual Hours x (Standard rate - Actual rate)
= 3,200 x ($14.00 - 12.00)
$6,400
Favorable
Labor efficiency Variance
= Standard rate x (Standard hours - Actual hours)
= $14.00 x (2,520 - 3,200)
-$9,520
Unfavorable
(b) In the past the 20 techniques employed in the production of Fludex consisted 5 senior and 15 assistance. Would you recommend the new labor mix.
No - The total labor variance is unfavorable.
Variable overhead rate Variance
= Actual Hours x (Standard rate - Actual rate)
= 3,200 x ($3.00 - 1.50)
$4,800
Favorable
Variable overhead efficiency Variance
= Standard rate x (Standard hours - Actual hours)
= $3.00 x (2,520 - 3,200)
-$2,040
Unfavorable
Material Price Variance
= Actual Qty x (Standard Price - Actual Price)
= 12,000 x ($18.00 - 16.50)
$18,000
Favorable
Material Quantity Variance
= Standard Price x (Standard Qty - Actual Qty)
= $18.00 x (8,640 - 8800)
-$2,880
Unfavorable
b. the material purchased from a new supplier, who is anxious to enter into long-term purchase contract. Would you recommend.
Yes- as the total material variance is favorable
Labor rate Variance
= Actual Hours x (Standard rate - Actual rate)
= 3,200 x ($14.00 - 12.00)
$6,400
Favorable
Labor efficiency Variance
= Standard rate x (Standard hours - Actual hours)
= $14.00 x (2,520 - 3,200)
-$9,520
Unfavorable
(b) In the past the 20 techniques employed in the production of Fludex consisted 5 senior and 15 assistance. Would you recommend the new labor mix.
No - The total labor variance is unfavorable.
Variable overhead rate Variance
= Actual Hours x (Standard rate - Actual rate)
= 3,200 x ($3.00 - 1.50)
$4,800
Favorable
Variable overhead efficiency Variance
= Standard rate x (Standard hours - Actual hours)
= $3.00 x (2,520 - 3,200)
-$2,040
Unfavorable
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