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

question 79

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
-Which of the following entries would correctly record the charging of direct labour costs to work in process given an unfavourable labour efficiency variance and a favourable labour rate variance?

• A)Work in process Wages payable
• B)Work in process Labour rate variance Labour rate variance Wages payable
• C)Work in process Labour efficiency variance Labour efficiency variance Wages payable
• D)Work in process Labour rate variance Labour efficiency variance Wages payable

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Definitions:

Life Cycle

The series of stages a product or organism goes through from its inception to its termination or decline.

Ethical Decisions

Choices made based on moral principles and values, considering the impact on stakeholders and society.

Environmentally Friendly

Practices or products that do not harm the environment during their manufacture, use, or disposal.

Product Design

The process of creating a new product to be sold by a business to its customers, focusing on specifications, features, and appearance.