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/HoursStandard Price/RateStandard Cost per BagDirect Material 25 pounds₱ 0.75₱18.75Direct Labor 0.25 hours₱69.00₱17.30Variable overhead 0.25 hours₱24.00₱ 6.00Total ₱42.05The 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 bagsDirect materials purchased: 585,000 pounds at a cost of ₱436,250Direct labor worked: 5,800 hours at a cost of ₱397,300Variable overhead incurred: ₱140,650Inventory of direct materials on January 31: 8,000 poundsCompute the variances and indicate whether it is FAVORABLE (F) or UNFAVORABLE (U) in your solution sheet.The raw materials inventory at standards cost amounts to ₱_____________.The variable manufacturing overhead rate variance amounts to ₱_____________.The labor flexible budget/spending variance amounts to ₱_____________.

Raw materials inventory refers to the total cost of all component parts that are currently in stock…

Answered: Cryolab Inc makes and sells a lawn…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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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 your solution sheet.

The raw materials inventory at standards cost amounts to ₱_____________.

The variable manufacturing overhead rate variance amounts to ₱_____________.

The labor flexible budget/spending variance amounts to ₱_____________.

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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