Reference: 11-03
the Albright Company Uses Standard Costing and Has

Multiple Choice

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-Which of the following variances would be useful in calling attention to possibl? problems in the control of spending on overhead items?
$$\begin{array} { | l | l | l | } \hline &\begin{array} {l } \text {vartable }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}&\begin{array} {l } \text {fixed }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}\\\hline \text { A } & \text { No } & \text { No } \\\hline \text { B } & \text { No } & \text { Yes } \\\hline \text { C } & \text { Yes } & \text { No } \\\hline \text { D } & \text { Yes } & \text { Yes } \\\hline\end{array}$$

A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.