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Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared...

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:

  1. Materials purchased, 12,000 ounces at a cost of $225,000.
  2. There was no beginning inventory of materials; however, at the end of the month, 2,500 ounces of material remained in ending inventory.
  3. The company employs 35 lab technicians to work on the production of Fludex. During November, they each worked an average of 160 hours at an average pay rate of $22 per hour.
  4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $18,200.
  5. During November, the company produced 3,750 units 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

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