Cole Laboratories Makes and Sells a Lawn Fertilizer Called Fastgro

question 59

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 labor rate variance for January is:

• A) $475 F
• B) $475 U
• C) $585 F
• D) $585 U

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Definitions:

Gain-Sharing Plans

A performance-based compensation strategy that shares the cost savings from productivity improvements with employees.

Repeat Business

The recurrence of customer purchases due to satisfaction with a product or service, contributing to the company's revenue over time.

Attendance Plans

Policies or programs established by an organization to manage employee attendance, including tracking, incentives for good attendance, and consequences for excessive absenteeism.

Administering

The process of managing or supervising the execution, application, or conduct of something.