Cole Laboratories Makes and Sells a Lawn Fertilizer Called Fastgro

question 50

Multiple Choice

Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: The company had no beginning inventories of any kind on Jan. 1. Variable overhead is applied to production on the basis of standard direct labor-hours. During January, the following activity was recorded by the company:
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 Jan. 31: 3,000 pounds
-The materials quantity variance for January is:

• A) $800 U
• B) $300 U
• C) $300 F
• D) $750 F

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Definitions:

Constant Marginal Cost

A situation in which the cost to produce one additional unit of output remains unchanged, regardless of the level of production.

Demand for Wine

The quantity of wine that consumers are willing to purchase at various prices, reflecting the relationship between price and quantity demanded in the wine market.

Cournot Duopolists

Firms in a duopoly (a market dominated by two firms) that determine their output levels simultaneously, under the assumption that the other will not change theirs.

Imports

Goods or services brought into one country from another for the purpose of trade or sale.