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: During November, the following activity was recorded relative to production of Fludex: (i) Materials purchased, 12,000 ounces at a cost of 225,000 . (ii) There was no beginning inventory of materials; however, at the end of the month, 2,500 ounces of material remained in ending inventory. (iii) 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 per hour. (iv) Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled 18,200. (v) During November, 3,750 good units of Fludex were produced. The company's management is anxious to determine the efficiency of Fludex production activities.
(c) Compute the variable overhead rate and efficiency variances. What relation can you see between this efficiency variance and the labor efficiency variance?