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

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
-Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour. During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. The direct labour efficiency variance was:

A) $2,020 favourable.
B) $1,200 unfavourable.
C) $2,020 unfavourable.
D) $1,200 favourable.

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