BLEM 4 Addis 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 Standard Standard Quantity or Hour Price or Rate Cost Direct materials 2.5 ounces ETB 20.00 per ounce ЕТВ 50.00 Direct labor 1.4 hours ETB 12.50 per hour ЕТВ 17.50 Variable manufacturing overhead ЕТВ 3.50 реr hour ETB 4.90 1.4 hours ETB 72.40 During November, the following activity was recorded by the company relative to production of Fludex: 1) Materials purchased, 12,000 ounces at a cost of ETB 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, each worked an average of 160 hours at an average rate of ETB 12 per hour. 4) Variable manufacturing overhead is assigned to Fludex on the basis of direct labor- hours. Variable manufacturing overhead costs during November totaled ETB 18,200. 5) 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. Required: a) For direct materials used in the production of Fludex, compute the price and quantity variances. b) For direct labor employed in the production of Fludex, compute the rate and efficiency variances. c) Compute the variable overhead spending and efficiency variances.
BLEM 4 Addis 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 Standard Standard Quantity or Hour Price or Rate Cost Direct materials 2.5 ounces ETB 20.00 per ounce ЕТВ 50.00 Direct labor 1.4 hours ETB 12.50 per hour ЕТВ 17.50 Variable manufacturing overhead ЕТВ 3.50 реr hour ETB 4.90 1.4 hours ETB 72.40 During November, the following activity was recorded by the company relative to production of Fludex: 1) Materials purchased, 12,000 ounces at a cost of ETB 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, each worked an average of 160 hours at an average rate of ETB 12 per hour. 4) Variable manufacturing overhead is assigned to Fludex on the basis of direct labor- hours. Variable manufacturing overhead costs during November totaled ETB 18,200. 5) 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. Required: a) For direct materials used in the production of Fludex, compute the price and quantity variances. b) For direct labor employed in the production of Fludex, compute the rate and efficiency variances. c) Compute the variable overhead spending and efficiency variances.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:BLEM 4
Addis 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
Standard
Standard
Quantity or Hour
Price or Rate
Cost
Direct materials
2.5 ounces
ETB 20.00 per ounce
ЕТВ 50.00
Direct labor
1.4 hours
ЕТВ 12.50 рer hour
ЕТB 17.50
Vari
ble manufacturing overhead
1.4 hours
ЕТВ 3.50 реr hour
ЕТВ 4.90
ETB 72.40
During November, the following activity was recorded by the company relative to production
of Fludex:
1) Materials purchased, 12,000 ounces at a cost of ETB 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, each worked an average of 160 hours at an average rate of ETB 12 per hour.
4) Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-
hours. Variable manufacturing overhead costs during November totaled ETB 18,200.
5) 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.
Required:
a) For direct materials used in the production of Fludex, compute the price and
quantity variances.
b) For direct labor employed in the production of Fludex, compute the rate and
efficiency variances.
c) Compute the variable overhead spending and efficiency variances.
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