Question

The Clark Company makes a single product and uses standard costing. Some data concerning this product...

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.

Homework Answers

Answer #1

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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