Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company
ID: 2343473 • Letter: C
Question
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:Direct material.............standard quantity 20 pounds/standard cost per bag $8.00
Direct labor................standard quantity hours 0.1 hrs./standard cost per bag $1.10
Variable overhead.........standard quantity 0.1 hrs./standard cost per bag $0.40
The company had no beginning inventories of any kind on Jan. 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: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on Jan. 31: 3,000 pounds
The materials price variance for January is:
a. $1,640 F b. $1,640 U c. $1,700 F d. $1,300 U
Explanation / Answer
C) 1700 F