Figure 17-7
Orient Company Has Developed the Following Standards for One

question 76

Multiple Choice

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.
-Refer to Figure 17-7. Orient's materials usage variance would be

• A)£22,000 unfavourable.
• B)£12,000 favourable.
• C)£10,000 unfavourable.
• D)£4,000 unfavourable.

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Definitions:

Management

Management involves the processes of organizing, planning, directing, and controlling resources efficiently and effectively to achieve predetermined objectives.

Retained Earnings

The portion of a company's profits not distributed as dividends but retained for reinvestment in the business or to pay debt.