Reference: 11-02
the Litton Company Has Established Standards as Follows

Multiple Choice

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. 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. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased (3,000 kg) } & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-The fixed overhead budget variance is measured by:

A) the difference between actual fixed overhead cost and applied fixed overhead cost.
B) the difference between budgeted fixed overhead cost and applied fixed overhead cost.
C) the difference between budgeted fixed overhead cost and standard fixed overhead cost.
D) the difference between budgeted fixed overhead cost and actual fixed overhead cost.