Use the  following information to answer this question.

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 Cost
                                                  Quantity                             per  bag
Direct material                      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 standard  direct-labor hours. During January, the company recorded the following  activity:

• 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 January 31: 3,000 pounds