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. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
- $$\begin{array} { | l | l | l | } \hline & \text { Food Costs } & \text { Supervisory Salaries } \\\hline \text { A } & \text { Yes } & \text { Yes } \\\hline \text { B } & \text { Yes } & \text { No } \\\hline \text { C } & \text { No } & \text { Yes } \\\hline \text { D } & \text { No } & \text { No } \\\hline\end{array}$$

A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Correct Answer:

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