Becton Labs, Inc., produces various chemical compounds for industrial use. Onecompound, called Fludex, is prepared using an elaborate distilling process. Thecompany has developed standard costs for one unit of Fludex, as follows:StandardStandard PriceStandardQuantityor RateCost42.00Direct materials2.00 ounces$21.00 per ounceDirect labor0.90 hours$12.00 per hour10.80Variable manufacturing0.90 hours$ 2.00 per hour1.80overhead54.60During November, the following activity was recorded relative to production of Fludex:a.Materials purchased, 10,000 ounces at a cost of $197,000.b.There was no beginning inventory of materials; however, at the end of the month,2,550 ounces of material remained in ending inventory.c. The company employs 24 lab technicians to work on the production of Fludex. DuringNovember, they worked an average of 170 hours at an average rate of $11.50 per hour.d.Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,800.e.During November, 3,700 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" forunfavorable, and "None" for no effect (i.e, zero variance).)Materials price varianceMaterials quantity variance b. The materials were purchased from a new supplier who is anxlous to enter Into along-term purchase contract. Would you recommend that the company sign thecontract?YesNo2. For direct labor.a. Compute the rate and efficiency varlances. (Input all amounts as positive values.Indicate the effect of each varlance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (I.e, zero varlance).)Labor rate varianceLabor efficiency varianceb. In the past, the 24 technicians employed in the production of Fludex consisted of 6senior technicians and 18 assistants. During November, the company experimentedwith fewer senlor techniclans and more assistants In order to save costs. Wouldyou recommend that the new labor mix be continued?YesNo3. Compute the varlable overhead rate and efficiency variances. (Input all amounts aspositive values. Indicate the effect of each varlance by selecting "F" for favorable,"U" for unfavorable, and "None" for no effect (I.e, zero varlance).)Variable overhead rate varianceVariable overhead efficiency variance

The variance is computed by comparing standard cost and actual cost. The standards are settled on…

Answered: Becton Labs, Inc., produces various…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74,000 units of product were as follows: Actual Costs Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Standard Costs Direct materials 192,400 lbs. at $5.10 per lb. 190,500 lbs. at $5.00 per lb. Direct labor 18,500 hrs. at $16.90 per hr. 18,930 hrs. at $17.30 per hr. Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Variable cost, $3.70 Fixed cost, $5.80 $67,770 variable cost $111,998 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance Direct…
Solomon Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Activities Unit Level Batch Level Product Level Facility Level Cost $ 78, 300 $ 28,910 $ 15,000 $ 180,000 Cost driver 2,700 labor hours 49 setups Percentage of use 18,000 units Production of 730 sets of cutting shears, one of the company's 20 products, took 180 labor hours and 5 setups and consumed 16 percent of the product - sustaining activities. Required Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 730 units…
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Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $30 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $ 12 8 2 9* Required 1 Required 2 Required 3 Required 4 12 $43 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 12,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted?…
Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct Materials $10.50 $24.00 Direct labor Variable factory overhead $5.50 Fixed factory overhead $12.00 Total Costs $52.00 $5,000 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit. Scott should: Select one: a. buy the part, because this would save $10.00 per unit. X b. buy the part, because this would save the company $5,000 annually. c. make the part, because this would save the company $5,000 annually. d. make the part, because this would save $2.00 per unit.
Becton Labs, Incorporated, produces various chemical compounds for industrial use. One compound, called Fludex, has the following standard cost per unit: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 2.40 ounces $ 18.00 per ounce $ 43.20 Direct labor 0.70 hours $ 14.00 per hour 9.80 Variable manufacturing overhead 0.70 hours $ 3.00 per hour 2.10 Total standard cost per unit $ 55.10 During November, the following activity was recorded related to the production of Fludex: Materials purchased, 12,000 ounces at a cost of $198,000. There was no beginning inventory of materials; however, at the end of the month, 3,200 ounces of material remained in ending inventory. The company employs 20 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 $12.00 per hour. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours.…
Becton Labs, Incorporated, 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: Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or 2.50 Hours ounces 0.90 hours Standard Price or Rate $ 22.00 per ounce $ 16.00 per hour 0.90 hours $ 2.00 per hour Standard Cost $ 55.00 14.40 1.80 $ 71.20 During November, the following activity was recorded related to the production of Fludex: a. Materials purchased, 14,000 ounces at a cost of $289,800. b. There was no beginning inventory of materials; however, at the end of the month, 4,050 ounces of material remained in ending inventory. c. The company employs 26 lab technicians to work on the production of Fludex. During November, they each worked an average of 150 hours at an average pay rate of $15.00 per hour. d. Variable…
Atlas Enterprises Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $27 per machine hour Assembly $11 per direct labor hour Setup $45 per setup Inspecting $23 per inspection Production scheduling $12 per production order Purchasing $9 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,861 1,098 Direct labor hours 413 161 Setups 62 19 Inspections 615 369 Production orders 65 13 Purchase orders 211 129 Units produced 295 198 Use the activity rate and usage information to calculate the total activity cost and…
Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Product Raw Material Standard Labor Time X442 Y661 Sintering Finishing Alpha6 1.8 kilos 2.0 liters 0.20 hours 0.80 hours Zeta7 3.0 kilos 4.5 liters 0.35 hours 0.90 hours Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production X442 14,500 kilos $ 52,200 $ 3.50 per kilo 8,500 kilos Y661 15,500 liters $ 20,925 $ 1.40 per liter 13,000 liters The following additional information is available: The company recognizes price variances when materials are purchased. The standard labor rate is $19.80 per hour in Sintering and $19.20 per hour in Finishing. During…
Franklin Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Cost Cost driver Req A and B Unit Level $ 62,400 2,400 labor hours Req C Allocated overhead Direct cost Total cost per unit Desired profit Sales price Production of 710 sets of cutting shears, one of the company's 20 products, took 170 labor hours and 6 setups and consumed 15 percent of the product-sustaining activities. Complete this question by entering your answers in the tabs below. Required a. Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using…
Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $30 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per 19,000 Units Unit Per Year $ 12 $ 228,000 10 3 190,000 57,000 3* 6 57,000 114,000 $ 34 $ 646,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 19,000 carburetors from the outside supplier? 2. Should the outside…
Becton Labs, Inc., produces vorious 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, es follows: Standard Quantity or Hours Standard Price or Rate $20.00 per ounce Standard Cost Direct materials 2.5 ounces $ 5e.ee Direct labor 1.4 hours $22.58 per hour 31.50 Variable manufacturing overhead Total standard cost per unit 1.4 hours $ 3.50 per hour 4.90 $ 86.48 During November, the following sctivity was recorded related to the 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 each worked an average of 160 hours at en average pay rate of $22 per hour. d. Variable manufacturing overhesd is…

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