Test Chapter 10.docx
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Chapter Test 10
The Litton Company has established standards as follows:
Direct Material 3 kgs. @ $4/kg. = $12 per unit
Direct Labour 2 hrs. @ $8/hr. = $16 per unit
Variable Manufacturing Overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price
variance when materials are purchased.
Units Produced 600
Direct Material Used 2,000 kgs.
Direct Material Purchased (3,000 kgs.) $11,400
Direct Labour Cost (1,100 hrs.) $ 9,240
Variable Manufacturing Overhead Cost Incurred $ 5,720
The company applies variable manufacturing overhead to products on the basis of direct labour hours.
1. What was the materials price variance?
2. What was the materials quantity variance?
3. What was the labour rate variance?
4. What was the labour efficiency variance?
5. What was the variable overhead spending variance?
6. What was the variable overhead efficiency variance?
Actual Fixed Overhead Cost $8,710
Flexible Budget Fixed Overhead Cost $9,000
Standard Hours 1,500
Total Variance $500F
1. Fixed portion of the predetermined overhead rate
2. Budget variance
3. Volume variance
4. Fixed overhead cost applied to work in process
5. Explain the budget variance
6. Explain the volume variance
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