Cole Laboratories Makes and Sells a Lawn Fertilizer Called Fastgro

question 131

Multiple Choice

Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:

The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows:

-What was the labour efficiency variance for January?

• A) $110 favourable.
• B) $130 unfavourable.
• C) $350 unfavourable.
• D) $475 favourable.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the expected cost, indicating how effectively a company is managing its raw material costs.

Accounts Payable

The amount a company owes to its suppliers or creditors for goods or services received that have not yet been paid for.

Work in Process

Products that are in the middle of the production process but are not yet finished.

Material Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the quantity purchased.