Solved

Reference: 11-11
the Clark Company Makes a Single Product and Uses

Question 90

Multiple Choice

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow:  Labour rate variance: $7,000 F Labour efficiency variance: $12,000 F Variable overhead efficiency variance: $4,000 F 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\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}
-Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance?


A) the mix of workers assigned to the particular job was heavily weighted towards the use of higher paid, experienced individuals.
B) because of the production schedule, workers from other production areas were assigned to assist this particular process.
C) defective materials caused more labour to be used in order to produce a standard unit.
D) the mix of workers assigned to the particular job was heavily weighted towards the use of new relatively low paid, unskilled workers.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions