Sal Amato operates a residential landscaping business in anaffluent suburb of St. Louis. In an effort to provide qualityservice, he has concentrated solely on the design and installationof upscale landscaping plans (e.g., trees, shrubs, fountains, andlighting). With his clients continually requesting additionalservices, Sal recently expanded into lawn maintenance, includingfertilization.

The following data relate to his first year’s experience with 55fertilization clients:

• Each client required nine applications throughout the year andwas billed $40.00 per application.

• Two applications involved Type I fertilizer, which contains aspecial ingredient for weed control. The remaining sevenapplications involved Type II fertilizer.

• Sal purchased 6,800 pounds of Type I fertilizer at $0.55 perpound and 11,800 pounds of Type II fertilizer at $0.45 per pound.Actual usage amounted to 5,550 pounds of Type I and 8,700 pounds ofType II.

• A new, part-time employee was hired to spread the fertilizer.Sal had to pay premium wages of $13.30 per hour because of a verytight labor market; the employee logged a total of 201 hours atclient residences.

• Based on previous knowledge of the operation, articles in tradejournals, and conversations with other landscapers, Sal establishedthe following standards:

• Fertilizer purchase price per pound: Type I, $0.68; Type II,$0.46
• Fertilizer usage: 58 pounds per application
• Typical hourly wage rate of landscape personnel: $9.70
• Labor time per application: 40 minutes

• The operation did not go as smoothly as planned, with customercomplaints actually much higher than expected.

Required:

1. 1. Compute Sal’s direct-material variances foreach type of fertilizer : Type I and Type II

2. 1. Direct material price variance

3. 2. Direct material quantity variance

4. 3. Direct material purchase price variance

5. 4. Direct labor rate variance

6. 5. Direct labor efficency variance

7. 2. Compute the direct-labor variances.

8. 3-a. Compute the actual cost of the clientapplications. (Note: Exclude any fertilizer in inventory, asremaining fertilizer can be used next year.)

9. 3-b. Calculate the profit or loss of Sal’s newlawn fertilization service.

10. 4. On the basis of the variances that youcomputed in parts (1) and (2) was the new service a success from anoverall cost-control perspective?

11. 5. Should the fertilizer service be continuednext year?