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

question 127

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

---

Definitions:

International Financial Reporting Standards

A set of accounting standards developed by the International Accounting Standards Board that provides globally consistent financial reporting norms.

Inventory Write-Downs

An accounting process of reducing the cost of inventory that has declined in value below its original cost.

Net Profit Margin Ratio

A profitability measure that calculates the percentage of net income derived from total revenues.

Operating Expenses

Operating expenses encompass the costs associated with running the day-to-day operations of a business, excluding the cost of goods sold, such as rent, utilities, and payroll.