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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