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

question 179

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 variable overhead efficiency variance?

• A) $500 favourable.
• B) $500 unfavourable.
• C) $520 favourable.
• D) $520 unfavourable.

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Definitions:

Earnings Per Share

A financial metric calculated by dividing a company's net income by the number of its outstanding shares of common stock.

Comparative Period

A reference period against which financial or operational performance is compared, typically the previous year or quarter.

Declaration

An official announcement or formal statement, often used in the context of declaring dividends to be paid to shareholders.

Cash Dividend

A Cash Dividend is a payment made by a company out of its earnings to investors in the form of cash.