$\text { The Litton Company has established standards as follows: }$

question 215

Multiple Choice

$\text { The Litton Company has established standards as follows: }$
$\begin{array}{|l|r|}\hline \text { Direct Material } & 3 \mathrm{kgs} @ @ 4 / \mathrm{kg} .=\$ 12 \text { per unit } \\\hline \text { Direct Labour } & 2 \mathrm{hrs} @ \$ 8 / \mathrm{hr} .=\$ 16 \text { per unit } \\\hline \text { Variable Manufacturing Overhead } & 2 \text { hrs. @ } \$ 5 / \mathrm{hr} .=\$ 10 \text { per unit } \\\hline\end{array}$
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
$\begin{array}{|l|r|}\hline \text { Units Produced } & 600 \\\hline \text { Direct Material Used } & 2,000 \mathrm{kgs} . \\\hline \text { Direct Material Purcahsed (3,000 kgs.) } & \$ 11,400 \\\hline \text { Direct Labour Cost }(1,100 \text { hrs. }) & \$ 9,240 \\\hline \text { Variable Manufacturing Overhead Cost Incurred } & \$ 5,720 \\\hline\end{array}$
The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-What was the materials price variance?

• A) $400 favourable.
• B) $400 unfavourable.
• C) $600 favourable.
• D) $600 unfavourable.

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Definitions:

Non-Importation Movement

an organized effort to stop importing goods from Britain during the American colonial period as a protest against taxes and British regulation.

West Indies

A region in the Caribbean, consisting of numerous islands that were historically colonized by European powers.

Sugar Trade

The historical exchange and commerce of sugar as a commodity, significantly impacting global economies and societies, particularly in the colonial period.

Homespun Clothing

Clothing made from cloth spun at home, symbolizing self-reliance and resistance to British goods during the American Revolutionary era.