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
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
‘ 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 January 31: 3,000 pounds
1. The labor efficiency variance for January is
A. $110 F.
B. $130 U.
C. $475 F.
D. $350 U.
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