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

question 33

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 variable overhead spending variance would be

• A)£4,800 favourable.
• B)£4,800 unfavourable.
• C)£3,600 unfavourable.
• D)£1,200 unfavourable.

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Definitions:

Cash Distribution

The payment of earnings from a corporation or a fund to its shareholders or investors.

Rental Income

The money earned from renting out a property or real estate.

Separately Stated

Separately stated items refer to certain income, deductions, and credits listed separately on a tax return or statement, affecting the taxpayer's obligations.

Recognized Gain

The portion of profit that must be reported for taxation purposes when an asset is sold or disposed of for more than its purchase price.