The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production based on direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance:$7,000 FLabour efficiency variance:$12,000 FVariable overhead efficiency variance:$4,000 FNumber 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 The actual direct labour rate for May in dollars per hour was: Multiple Choice $11.50. $11.75. $12.00. $12.50.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Clark Company makes a single product and uses
Labour rate variance:$7,000 FLabour efficiency variance:$12,000 FVariable overhead efficiency variance:$4,000 FNumber 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
The actual direct labour rate for May in dollars per hour was:
Multiple Choice
- $11.50.
- $11.75.
- $12.00.
- $12.50.
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