Pearce Company Pearce Company Uses a Standard Cost System for Its Production

question 131

Multiple Choice

Pearce Company
Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

• A)$23,850 U
• B)$23,850 F
• C)$14,280 F
• D)$14,280 U

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Refer to Pearce Company Using the three-variance approach,what is the spending variance?

---

Definitions:

Normative Influence

The impact others have on our behavior through norms or behaviors that are deemed acceptable by a group, leading individuals to conform in order to be liked or accepted.

Solomon Asch

A prominent psychologist known for his research on conformity, including his famous experiments demonstrating how people could be influenced to contradict their own accuracy for group consensus.

Halo Effect

The cognitive bias where the perception of one positive trait (such as attractiveness) leads to the unfounded assumption of other positive traits, such as intelligence or morality.

Rarity Principle

A concept in economics and marketing suggesting that rare or scarce items are perceived as more valuable.