Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company
ID: 2444026 • Letter: C
Question
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:Standard Standard Cost
Quantity per Bag
Direct material 20 pounds $8.00
Direc labor 0.1 hours $1.10
variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on Jan. 1. Variable overhead is applied to production on the basis of standard direct labor-hours. During January, the following activity was recorded by the company:
• Production of Fastgro: 4,000 bags
• Direct materials used: 85,000 pounds at a cost of $32,300
• Direct labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
1. The materials quantity variance for January is:
Explanation / Answer
The total Variance analysis for Variable Overhead is given by :
Actual Overhead - Overhead Applied:
$1,475 - ($4,000 * 0.1 * 0.4) = -$125
Therefore, we find:
The variance is $125(F)