CoursHeroTranscribedText: Problem 1 Nikke Agri. makes and sells a lawn fertilizer called Fastgro. The company has developed a standard costs for one bag of Fastgro as follows: Item Standard Quantity Std. Cost/bag Direct materials 20 pounds 8.00 Direct labor 0.1 hours 1.10 Variable overhead 0.1 hours 0.40 The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of direct labor hours. During January, the following activity was recorded by the company. Direct materials purchased 85,000 pounds at a cost of $32.300 Direct labor hours worked 390 hours at a cost of P4,875 Actual Variable Mig. Overhead P1,475 Production of Fastgro 4,000 bags Inventory of direct materials - Jan. 31 3,000 pounds