The Litton Company has established standards as follows:

Direct Material	2 kgs. @ $3 /kg. = $6 per unit
Direct Labour	1 hr. @ $4 /hr. = $4 per unit
Variable Manufacturing Overhead	1 hrs. @ $2 /hr. = $2 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	610
Direct Material Used	2,700 kgs.
Direct Material Purchased (3,000 kgs.)	$5,700
Direct Labour Cost (1,100 hrs.)	$4,620
Variable Manufacturing Overhead Cost Incurred	$2,860

The company applies variable manufacturing overhead to products on the basis of direct labour hours.

What was the materials price variance?

Multiple Choice

• $400 favourable.

• $400 unfavourable.

• $3,300 favourable.

• $600 unfavourable

2. The Litton Company has established standards as follows:

Direct Material	2 kgs. @ $3 /kg. = $6 per unit
Direct Labour	1 hr. @ $4 /hr. = $4 per unit
Variable Manufacturing Overhead	1 hrs. @ $2 /hr. = $2 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	610
Direct Material Used	2,700 kgs.
Direct Material Purchased (3,000 kgs.)	$5,700
Direct Labour Cost (1,100 hrs.)	$4,620
Variable Manufacturing Overhead Cost Incurred	$2,860

The company applies variable manufacturing overhead to products on the basis of direct labour hours.

What was the materials quantity variance?

Multiple Choice

• $760 favourable.

• $760 unfavourable.

• $800 unfavourable.

• $4,440 unfavourable.