Reference: 11-02
the Litton Company Has Established Standards as Follows

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \text { hrs. } ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-Information on Kennedy Company's direct material costs follows: $$\begin{array} { | l | l | l | } \hline \text { Standard price per gram of raw materials } & \$ 3.60 & \\\hline \text { Actual quantity of raw materials purchased } & 1,600 & \text { grams } \\\hline \text { Standard quantity allowed for actual production } & 1,450 & \text { grams } \\\hline \text { Materials purchase price variance-favourable } & \$ 240 & \\\hline\end{array}$$ What was the actual purchase price per unit, rounded to the nearest penny?

A) $3.75.
B) $3.06.
C) $3.11.
D) $3.45.

Correct Answer:

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