Production on the basis of standard direct-labor hours

Reference no: EM131007920

Use the following information to answer this question.

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

Reference no: EM131007920

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