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

question 54

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 materials price variance for January is?

• A)$1,700 F.
• B)$1,640 U.
• C)$1,300 U.
• D)$1,640 F.

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Definitions:

Authorization Cards

Documents signed by employees to indicate their wish to be represented by a union, often used in the process of forming a union within a workplace.

Collective Agreement

A written contract negotiated between an employer and a union representing the employees, outlining terms of employment.

Union Shop

Provision of the collective agreement that requires employees to join the union as a condition of their employment.

Compulsory Unionization

A policy or practice requiring all employees in a particular sector or company to become members of a union.