The Clark Company makes a single product and uses standard
costing. Some data concerning this product for the month of May
follow:
Labour rate variance | $7,000 favourable |
Labour efficiency variance | $12,000 favourable |
Variable overhead efficiency variance | $4,000 favourable |
Number of units produced | 10,000 |
Standard labour rate per direct labour hour | $12 |
Standard variable overhead rate per direct labour hour | $4 |
Actual labour hours used | 14,000 |
Actual variable manufacturing overhead costs | $58,290 |
1)
What was the variable overhead spending variance for May?
Multiple Choice
$1,710 favourable.
$1,710 unfavourable.
$2,290 favourable.
$2,290 unfavourable.
2)
What was the actual direct labour rate for May in dollars per hour?
Multiple Choice
$11.50.
$11.75.
$12.00.
$12.50.
3)
What was the total standard cost for direct labour for May?
Multiple Choice
$120,000.
$161,000.
$168,000.
$180,000
4)
What was the total standard cost for variable overhead for May?
Multiple Choice
$40,000.
$50,000.
$56,000.
$60,000.
5)
What are the standard hours allowed to make one unit of finished product?
Multiple Choice
1.0 hours.
1.2 hours.
1.5 hours.
2.0 hours.
1. Variable overhead spending variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)
= $58,290 - (14,000 * $4)
= $2,290 Unfavorable
2. Labor rate variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)
$(7,000) = (14,000 * Actual rate) - (14,000 * $12)
Actual rate = $11.5
3. Labor efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)
$(12,000) = (14,000 * $12) - (Standard hours * Standard rate)
Standard cost = $180,000
4. Variable overhead efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)
$(4,000) = $58,290 - (Standard hours * Standard rate)
Standard cost = $62,290
5. Labor efficiency variance = [(Actual hours * Standard rate) - (Standard hours * Standard rate)] / 10,000
$(12,000) = [(14,000 * $12) - (Standard hours * $12)] / 10,000
Standard hours = 15,000 / 10,000
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