The Litton Company Has Established Standards as Follows

question 109

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 variable overhead rate variance is:

• A)$240 U
• B)$220 U
• C)$220 F
• D)$240 F

---

Definitions:

Demand

The volume of commodities or services people are inclined and financially capable of purchasing at various price points during a designated time.

Opportunity Cost

Opportunity cost represents the value of the best alternative forgone when a decision is made to choose one option over another.

Bushel

A measure of volume that is used primarily for agricultural crops, with the exact measurement differing by product.

Bananas

A type of elongated, edible fruit produced by several kinds of large herbaceous flowering plants in the genus Musa.