The Litton Company Has Established Standards as Follows

question 174

Multiple Choice

The Litton Company has established standards as follows:

Direct material: 3 pounds per unit $4 per pound = $12 per unit
Direct labor: 2 hours per unit $8 per hour = $16 per unit
Variable manufacturing overhead: 2 hours per unit $5 per hour = $10 per unit

Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
The company applies variable manufacturing overhead to products on the basis of standard direct labor-hours.
-The materials price variance is:

• A)$400 U
• B)$400 F
• C)$600 F
• D)$600 U

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Definitions:

Goods

Items or merchandise that are tangible, movable, and sold or used in commerce.

Contract

A legally binding agreement between two or more parties that outlines rights and duties and is enforceable by law.

Identified

Singled out or recognized from among others.

Existing

Currently present or in existence.