Reference: 11-04
Cole Laboratories Makes and Sells a Lawn Fertilizer

question 96

Multiple Choice

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams
-The Adlake Company makes and sells a single product and uses a standard cost system. During October, the company budgeted $300,000 in fixed manufacturing overhead cost at a denominator activity of 20,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during October: $$\begin{array} { | l | l | } \hline \text { Total actual fixed manufacturing overhead cost incurred } & \$ 294,000 \\\hline \text { Units of product completed } & 3,800 \\\hline \text { Actual machine-hours worked } & 19,422 \\\hline\end{array}$$ The amount of fixed overhead cost that the company applied to work in process for
October was:

• A)$294,000.
• B)$291,330.
• C)$285,000.
• D)$279,300.

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Definitions:

Virtual Reality Exposure Therapy

A therapeutic technique that uses simulated environments within virtual reality to expose individuals to situations related to their psychological issues in a controlled manner.

Aversive Conditioning

A form of behavior therapy that involves repeated association of an undesired behavior with an unpleasant stimulus to reduce the behavior.

Double-blind Procedure

A study design in which neither the participants nor the experimenters know who is receiving a particular treatment, to prevent bias in research results.

Joseph Wolpe

A psychiatrist known for developing systematic desensitization, a process used to reduce phobias and anxieties.