Figure 17-2
Rax Company Has Developed the Following Standards for One

question 25

Multiple Choice

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.
-Refer to Figure 17-2. Rax's labour efficiency variance would be

• A)£4,300 unfavourable.
• B)£4,300 favourable.
• C)£1,800 unfavourable.
• D)£1,800 favourable.

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Definitions:

Bilateral Contract

An agreement involving two parties where each promises to perform an act in exchange for the other's act.

Unilateral Contract

A contract where one party makes a promise in exchange for an act by another party, which upon performance, binds the first party to its promise.

Promissory Estoppel

A law that stops someone from going back on a commitment they've made to another if the second party has trusted this promise to their own disadvantage.

Promissory Estoppel

A judicial doctrine that forbids a party from revoking an assurance given to another party if the recipient has legitimately acted on that promise to their detriment.