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Cole laboratories makes and sells a lawn fertilizer called Fastgro

Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard
Standard Quantity Cost per Bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours 1.10
Variable manuf. overhead 0.1 hours .40

The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of 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 manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 pounds

22. The materials price variance for January is:
A) $1,640 F.
B) $1,640 U.
C) $1,700 F.
D) $1,300 U.
Could you please define what CMPV is?

CMPV = (.38-.40) 85000=1700F

Also what exactly is this second calulations for?

AP=32300/85000, SP = 8.00/20lbs

I have prepared the following: Check my work please!

(Cost of Materials Price Variable) CMPV = (.38-.40) 85000=1700F

(.38-.40) =-.0.2*85000=-1700 or (1700)

(The bottom calculation helped me get my top calculation)

AP=32300/85000= .38 Direct materials purchased: 85,000 pounds at a cost of $32,300

SP = 8.00/20lbs=.40 Direct material 20 pounds $8.00

Solution Preview

MPV = (AP - SP) AQ
Where,
MPV is Material Price Variance
AP is Actual unit price of materials
SP is Standard unit price of materials
AQ is Actual quantity of materials purchased
In the given question the data ...

Solution Summary

The expert examines Cold laboratories making and selling lawn fertilizers called Fastgo.

$2.19