Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed… 1 answer below »
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Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Quantity
Standard Cost per bag
Direct material
20 pounds
$8.00
Direct labor
0.1 hours
$1.10
Variable overhead
0.1 hours
$0.40
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 company recorded the following activity:
– 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 January 31: 3,000 pounds
The materials price variance for January is
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