Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: 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

Question

Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:  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

Quizplus · Accepted Answer

The Answer of Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:  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

Cole Laboratories Makes and Sells a Lawn Fertilizer Called Fastgro