Exam 13: Accounting for Overhead Costs

In actual practice, prorating is done only when it would materially affect inventory valuations.

The production-volume variance measures the difference between applied and budgeted fixed overhead.

_____ is the most important contributor to the variances between actual and applied overhead.

The excess of actual overhead over the overhead applied to products is called _____.

Absorption costing is more widely used than variable costing.

Production-volume variance = applied fixed overhead - budgeted fixed overhead.

No one cost driver is right for all situations.

A company has the following information for its first month of operations: Raw materials used \ 25,000 Sales \ 65 per unit) \ 78,000 Direct labor \ 42,000 Variable factory overhead \ 17,000 Fixed factory overhead unknown Variable selling and administrative \ 3,000 Fixed selling and administrative \ 5,000 Gross profit \ 30,000 Contribution margin unknown Ending inventories: Raw materials \ 7,000 WIP none Finished goods 1,200 units _____ is the inventory cost per unit using variable costing.

Absorption costing assigns _____ to the product.

It is possible for variable overhead to have a production-volume variance.

_____ is least likely to be a cost driver as a basis for applying overhead costs.

Underapplied and overapplied fixed overhead has two components: 1) a production-volume variance, and 2) a fixed-overhead flexible-budget variance.

_____ is are) expensed as a period cost under variable costing.

Pennsylvania Company reported the following information about the production and sales of its only product during its first month of operations: Sales \ 225 per unit) \ 360,000 Direct materi als used \ 176,000 Direct labor \ 100,000 Variable factory overhead \ 44,000 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 20,000 Fixed selling and administrative expenses \ 10,000 Ending inventories: Direct materials -0- WIP -0- Finished goods 400 units The operating income loss) under variable costing is_____.

There should be a strong cause?and?effect relationship between the factory overhead incurred and the cost driver chosen for its application.

The following information was gathered for Indians Company: Budgeted direct-labor hours 8,000 Actual direct-labor hours 8,400 Budgeted factory overhead \ 220,875 Actual factory overhead \ 224,970 Assume the cost driver is direct-labor hours.The budgeted factory-overhead rate is _____.

Panthers Company reported the following information about the production and sales of its only product during its first month of operations: Sales \ 225 per unit) \ 315,000 Direct materials used \ 160,000 Direct labor \ 100,000 Variable factory overhead \ 60,000 Fixed factory overhead \ 80,000 Variable selling and admiristrative expenses \ 20,000 Fixed selling and administrative expenses \ 30,000 Ending inventories: Direct materials -0- WIP -0- Finished goods 600 units The ending inventory under absorption costing is_____.

The denominator in the computation of the fixed overhead rate

Dodgers Company had the following information: Budgeted factory overhead \ 90,000 Actual factory overhead \ 82,000 Budgeted: Machine hours 40,000 Actual: Machine hours 35,500 The budgeted factory-overhead rate using machine hours as the cost driver is _____.

The _____ is not a difference between the standard absorption-costing format and the variable-costing format.