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    Litton Company: Variable Manufacturing Overhead

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    Use the following to answer question 24:

    The Litton Company has established standards as follows:
    Direct material 3 lbs. @ $4/lb. = $12 per unit
    Direct labor 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.
    Units produced 600
    Direct material used 2,000 lbs.
    Direct material purchased (3,000 lbs.) $11,400
    Direct labor cost (1,100 hrs.) $ 9,240
    Variable manuf. overhead cost incurred $ 5,720

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

    24.The variable overhead efficiency variance is:
    A) $520 F. C) $500 U.
    B) $520 U. D) $500 F.

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    https://brainmass.com/business/accounting/litton-company-variable-manufacturing-overhead-54161

    Solution Preview

    Please find a detailed solution attached.

    Use the following to answer question 24:
    The Litton Company has established standards as follows:
    Direct material 3 lbs. @ $4/lb. = $12 per unit
    Direct labor 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 ...

    Solution Summary

    The attached solution shows the formula with an explanation and calculates the answer.

    $2.19

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