In: Accounting
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 |
Standard Cost | |||||
Direct materials | 2.5 | ounces | $ | 20.00 | per ounce | $ | 50.00 |
Direct labor | 1.4 | hours | $ | 22.50 | per hour | 31.50 | |
Variable manufacturing overhead | 1.4 | hours | $ | 3.50 | per hour | 4.90 | |
Total standard cost per unit | $ | 86.40 | |||||
During November, the following activity was recorded related to the production of Fludex:
Required:
1. For direct materials:
a. Compute the price and quantity variances.
Materials price variance | ||
Materials quantity variance |
2. For direct labor:
a. Compute the rate and efficiency variances.
Labor rate variance | ||
Labor efficiency variance |
3. Compute the variable overhead rate and efficiency variances.
Variable overhead rate variance | ||
Variable overhead efficiency variance |