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

question 48

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: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$
-The following standards for variable manufacturing overhead have been established for a company that makes only one product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard hours per unit of output } & 5.6 \text { hours } \\\hline \text { Standard variable overhead rate } & \$ 12.00 \text { per hour } \\\hline\end{array}\\\text { The following data pertains to operations for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours } & 2,600 \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 31,330 \\\hline \text { Actual output } & 400 \text { units } \\\hline\end{array}\end{array}$$ What is the variable overhead spending variance for the month?

• A)$4,338 U.
• B)$130 U.
• C)$112 F.
• D)$4,450 U.

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Definitions:

Client-Visits

The number of times clients come into contact with the service provider, which could be in person or virtually, within a given period.

Medical Supplies

Items used in medical care, including tools, equipment, and consumables, essential for diagnosing, preventing, and treating illnesses.

Units

A measurement of quantity, used in various contexts to indicate the amount, volume, or number of items or elements.

Spending Variance

The variance between the anticipated budget for an expense and the actual expenditure.