1. Direct material variance of each type of fertiliser .2. Direct labor variance 3. Actual cost of client applications-exclude fertiliser inventory. 4. Analyse the variance from 1 and 2quesWas the new service a success? What gave rise to complaints.5. Should the company continue next year

Problem 10-36 Variance Calculation; Analy- Sal Amato operates a residential landscaping business in an affluent suburb of St. Louis. In an effort to 5is; Service Business provide quality service. he has concentrated solely on the design and installation of upscale landscape (LO 10-1, 10-3) ing plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually requesting additional services, Sal recently expanded into lawn maintenance, including fertilization. 2. Direct-labor efficiency vari- The following data relate to his first year's experience with 55 fertilization clients: ance: $495.00 F 4. Total material and labor Each client required six applications throughout the year and was billed $40 per application. variances: $897.50 F Two applications involved Type I fertilizer. which contains a special ingredient for weed control. The remaining four applications involved Type II fertilizer. Sal purchased 5,000 pounds of Type I fertilizer at $.53 per pound and 10,000 pounds of Type II fertilizer at $.40 per pound. Actual usage amounted to 3,700 pounds of Type I and 7.800 pounds of Type II. A new, part-time employee was hired to spread the fertilizer. Sal had to pay premium wages of $11.50 per hour because of a very tight labor market: the employee logged a total of 165 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers, Sal established the following standards: Fertilizer purchase price per pound: Type I, $.50; Type II. $.42 Fertilizer usage: 40 pounds per application Typical hourly wage rate of landscape personnel: $9 Labor time per application: 40 minutes The operation did not go as smoothly as planned, with customer complaints actually much higher