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 Standard Price or
Rate Standard
Cost Direct materials 2.5 ounces $20.00 per ounce $50.00 Direct labor 1.4 hours $12.50 per hour 17.50 Variable manufacturing overhead 1.4 hours $3.50 per hour 4.90 $72.40 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 12,000 ounces at a cost of $225,000. b. There was no beginning inventory of materials; however, at the end of the month, 2,500 ounces of material remained in ending inventory.
c. The company employs 35 lab technicians to work on the production of Fludex. During November, they worked an average of 160 hours at an average rate of $12 per hour.
d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor­hours. Variable manufacturing overhead costs during November totaled $18,200.
e. During November, 3,750 good units of Fludex were produced. The company's management is anxious to determine the efficiency of the Fludex production activities. Requirement 1: For direct materials used in the production of Fludex: (a) Compute the price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Materials price variance $ (Click to select)NoneUF Materials quantity variance $ (Click to select)UNoneF ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
Solution:
Materials price variance = AQ (AP – SP) 9,420 ounces ($49,926/9,420 – $5.70 per ounce) = $4,800 Favorable
Materials quantity variance = SP (AQ – SQ) $5.70 X ([9,420 ­ 1,600] ounces – [4,600 x 1.30] ounces) $5.70 X (7,820 ­ 5980) = $10,488 Unfavorable (b) The materials were purchased from a new supplier who is anxious to enter into a long­term purchase contract. Would you recommend that the company sign the contract? (Click to select)YesNo Solution:
Yes, the contract labor should be signed. Requirement 2: For direct labor employed in the production of Fludex: (a) Compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Labor rate variance $ (Click to select)UNoneF Labor efficiency variance $ (Click to select)FUNone ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
Solution:
Labor Rate (Price) Variance = AH (AR – SR) [40 x 61.50] hours X ($12.30 per hour – $11.60 per hour) = $1,722 Unfavorable Labor efficiency (Usage) variance = SR (AH – SH) $11.60 per hour X ([40 x 61.50] hours – [0.6 x 4600] hours) = $11.60 X (2,460 ­ 2,760) = $3,480 Favorable
(b) In the past, the 35 technicians employed in the production of Fludex consisted of 20 senior technicians and 15 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to save costs. Would you recommend that the new labor mix be continued? (Click to select)YesNo Solution:
No, new labor mix should not be continued because new labor mix increases overall labor costs.
Requirement 3: (a) Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Variable overhead spending variance $ (Click to select)UFNone Variable overhead efficiency variance $ (Click to select)FNoneU ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
Solution:
Variable overhead spending variance = AH (AR – SR)
5,600 hours ($3.25 per hour* – $3.50 per hour) = $1,400 F
*$18,200 ÷ 5,600 hours = $3.25 per hour
Variable overhead efficiency variance = SR (AH – SH) $3.50 per hour (5,600 hours – 5,250 hours) = $1,225 U
(b) What relation can you see between this efficiency variance and the labor efficiency variance? (Click to select) Directly related. Independent. Solution:
They are directly related, if labor efficiency variance is unfavorable then variable overhead efficiency will be unfavorable.

SuperTutor

(15)

Status NEW Posted 21 Apr 2017 12:04 AM My Price 10.00

-----------

Attachments

file 1492734579-Solutions file.docx preview (56 words )

S-----------olu-----------tio-----------ns -----------fil-----------e -----------Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k y-----------ou -----------for----------- yo-----------ur -----------int-----------ere-----------st -----------and----------- bu-----------yin-----------g m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l b-----------e q-----------uic-----------kly----------- on-----------lin-----------e a-----------nd -----------giv-----------e y-----------ou -----------exa-----------ct -----------fil-----------e a-----------nd -----------the----------- sa-----------me -----------fil-----------e i-----------s a-----------lso----------- se-----------nt -----------to -----------you-----------r e-----------mai-----------l t-----------hat----------- is----------- re-----------gis-----------ter-----------ed -----------onÂ----------- th-----------is -----------web-----------sit-----------e. ----------- H-----------YPE-----------RLI-----------NK -----------&qu-----------ot;-----------htt-----------p:/-----------/wo-----------rkb-----------ank-----------247-----------.co-----------m/&-----------quo-----------t; -----------\t -----------&qu-----------ot;-----------_bl-----------ank-----------&qu-----------ot;----------- -----------Tha-----------nk -----------you----------- -----------

Not Rated(0)

• Buy Answer