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: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$
-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.

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Definitions:

Positive

Characterized by or displaying an optimistic, constructive, or affirmative nature or outcome.

Alert

A state of active attention and readiness to respond to potential threats or important occurrences.

Prefrontal Cortex

The front part of the frontal lobe of the brain, involved in complex behaviors including planning, decision making, moderating social behavior, and expressing personality.

Activation

The process of stimulating an action or behavior; in psychology, it refers to the arousal of the nervous system prompting mental and physical responses.