Compute the variable overhead rate and efficiency variances

Reference no: EM13594740

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 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 over head 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 $225,000
b. There was no beg inventory of materials; however at the end of the month, 2,500 ounces of material remained in ending inventory
c. tHE COMPANY EMPLOYS 35 LAB TECHNICIANS TO WORK ON THE PRODUCTION OF fLUDEX. dURING November, THEY WORKED AN AVERAGE OF 160 HOURS AT AN AVERAGE RATE OF 12$ an hour
D. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled 18,200
E. During November 3,750 good units of Fludex were produced. The company management is anxious to determine the efficiency of Fludex productions activities.
Required
1. For direct materials used in the production of Fludex:
a. Compute the price and quantity variances
b. The materials were purchased from a new supplier who is anxious to enter into a long term purchase contract. Would you recommend the the company sign the contract? explain
2. For direct labor employed in the production of Fludex
a. Compute the rate and efficiency variances.
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?
3. Compute the variable overhead rate and efficiency variances. What relation can you see between this efficiency variance and the labor efficiency variance?

Reference no: EM13594740

Questions Cloud

As a cfo of the university and a memeber of the finance : an established college of business with a large undergraduate program and an active mba program is looking into the

Calculate the value of n1n that is the ratio of the number : calculate the value of n1n that is the ratio of the number of nuclei in the first excited nuclear energy level to the

What is the molarity of a 1025 ml ethanolsugar solution : what is the molarity of a 1025 ml ethanolsugar solution that has a freezing point of -120.87 deg c. freezing point of

Question the angular momentum of a spinning wheel is 231 kg : question the angular momentum of a spinning wheel is 231 kg middot m2s. after application of a constant braking torque

Compute the variable overhead rate and efficiency variances : becton labs inc. produces various chemical compounds for industrial use. one compound called fludex is prepared using

A transformer connected to a 120-v rms ac line is to supply : a transformer connected to a 120-v rms ac line is to supply 12. v rms to a portable electronic device. the total

What is the freezing depression if 25 moles of sodium : what is the freezing depression if .25 moles of sodium chloride was dissolved in 350ml of

If the vial weights 18556 g when filled with liquid mercury : an empty vial weights 55.32 g.a if the vial weights 185.56 g when filled with liquid mercury d13.53 gcm3 what is its

What is the total energy in kj needed to raise 20 g of ch4o : what is the total energy in kj needed to raise 20 g of ch4o methanol from - 120 degc to 100 degc? show your work.change

User Account

All Pages