The Albright Company Uses Standard Costing and Has Established the Following

question 149

Multiple Choice

The Albright Company uses standard costing and has established the following standards $f$ its single product:
$\begin{array}{|l|r|}\hline \text { Direct Materials } & 2 \text { litres at \$3 per litre } \\\hline \text { Direct Labour } & 0.5 \text { hours at \$8 per hour } \\\hline \text { Variable Manufacturing Overhead } & 0.5 \text { hours at \$2 per hour } \\\hline\end{array}$
During November, the company made 4,000 units and incurred the following costs:
$\begin{array}{|l|r|}\hline \text { Direct Materials Purchased } & 8,100 \text { litres at } \$ 3.10 \text { per litre } \\\hline \text { Direct Materials Used } & 7,600 \text { litres } \\\hline \text { Direct Labour Used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual Variable Manufacturing Overhead } & \$ 4,175 \\\hline\end{array}$
The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-What was the materials quantity variance for November?

• A) $300 unfavourable.
• B) $1,200 favourable.
• C) $1,200 unfavourable.
• D) $1,500 favourable.

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Operating Activity

Activities that involve the core business operations of a company, such as selling, managing, and producing goods and services.

Paying Interest

The act of providing compensation to lenders for the use of borrowed money, usually calculated as a percentage of the principal amount.

Lenders

Individuals or institutions that provide funds to others under the agreement that the funds will be repaid, typically with interest.