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 labour rate variance?

Multiple Choice

• $480 favourable.

• $480 unfavourable.

• $440 favourable.

• $220 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 labour efficiency variance?

Multiple Choice

• $1,960 unfavourable.

• $1,000 unfavourable.

• $1,840 favourable.

• $840 unfavourable.