Variance Performance Analysis Cryolab Inc makes and sells a lawn fertilizer called Hypergro. The company has developed standard costs for one bag of Hypergro as follows:

	Standard Quantity/Hours	Standard Price/Rate	Standard Cost per Bag
Direct Material	25 pounds	₱ 0.75	₱18.75
Direct Labor	0.25 hours	₱69.00	₱17.30
Variable overhead	0.25 hours	₱24.00	₱ 6.00
Total			₱42.05

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 following activity was recorded by the company:

• Production of Fastgro: 23,000 bags

• Direct materials purchased: 585,000 pounds at a cost of ₱436,250

• Direct labor worked: 5,800 hours at a cost of ₱397,300

• Variable overhead incurred: ₱140,650

• Inventory of direct materials on January 31: 8,000 pounds

Compute the variances and indicate whether it is FAVORABLE (F) or UNFAVORABLE (U) in solution sheet.

Answer rating: 100% (QA)

Direct material Price variance Direct mat aial usage variance Direct La... View the full answer