Cole Laboratories Makes and Sells a Lawn Fertilizer Called Fastgro

question 28

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 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 purchased: 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
Inventory of direct materials on Jan. 31: 3,000 pounds
-The total variance (both rate and efficiency) for variable overhead for January is:

• A) $85 F
• B) $40 F
• C) $100 U
• D) $125 F

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Definitions:

Historical Data

Recorded information from past events and activities, used as a reference for analysis, decision making, and forecasting future trends.

Quality Improvement

The ongoing effort to improve the quality of products, services, or processes, typically involving systematic and continuous actions.

Decision Making

The process of selecting a course of action from among multiple alternatives, often involving both judgment and analysis.

Degree of Uncertainty

The extent to which outcomes or consequences are unknown or unpredictable.