Reference: 11-04
Cole Laboratories Makes and Sells a Lawn Fertilizer

question 67

Multiple Choice

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams
-The labour efficiency variance for January is?

• A)$130 U.
• B)$475 F.
• C)$110 F.
• D)$350 U.

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Definitions:

Statistical Quality Control

The application of statistical methods to monitor and control a process to ensure that it operates at its full potential to produce conforming product.

CRM

Customer Relationship Management (CRM) is a strategy and set of technologies used by organizations to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving customer service relationships and assisting in customer retention and sales growth.

Continuous Attention

Ongoing focus and vigilance towards a task, project, or objective to ensure its successful completion.

Value Chain Analysis

A strategic analysis tool used to identify the primary and support activities of a business that create value for the customer, to enhance competitive advantage.