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

question 199

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 spending variance?

• A) $220 favourable.
• B) $220 unfavourable.
• C) $240 favourable.
• D) $240 unfavourable.

---

Definitions:

Mesoderm

The middle layer of an embryo in early development, from which the musculoskeletal, circulatory, and excretory systems of the body develop.

Ectoderm

Ectoderm is the outermost layer of cells or tissue of an embryo in early development, giving rise to the formation of the nervous system and skin.

Endoderm

The innermost layer of cells or tissue of an embryo in early development that gives rise to the lining of the digestive and respiratory systems.

Embryonic Stage

A critical phase in prenatal development that occurs from about the 2nd to the 8th week after fertilization, during which major organs and structures begin to develop.