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

question 130

True/False

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: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$
-In a standard costing system, under-applied or over-applied fixed overhead is equal to the sum of the fixed overhead budget variance and the fixed overhead volume variance.

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Definitions:

Variable Costs

Expenses that fluctuate with production volume, such as raw materials, direct labor, and certain utilities.

Special Equipment

Equipment that is not standard issue and is designed or selected for a specific task or environment.

Beet Fiber

A byproduct of sugar beet processing that is used as a dietary fiber supplement or in the production of biodegradable products.

Refined Sugar

Sugar that has been processed to remove impurities and achieve a desired level of purity.