Exam 13: Job-Costing

Buffaloes Company had the following information: Budgeted factory overhead \ 78,000 Actual factory overhead \ 75,000 Budgeted: Production setups 12,000 Actual: Production setup s 11,500 The journal entry to apply overhead to a job requiring 4,800 setups includes a:

If a company uses the variable- costing approach, a manager might be temped to produce unneeded units just to increase reported operating income.

is(are) another term for variable costing.

The budgeted factory- overhead rate is computed as:

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

A company has the following information for the current month of operations: Raw materials used \ 37,500 Sales (\ 97.50 per unit) \ 117,000 Direct labor \ 63,000 Variable factory overhead \ 25,500 Fixed factory overhead unknown Variable selling and administrative \ 4,500 Fixed selling and adminis trative \ 7,500 Gross profit \ 45,000 Contribution margin unknown Inventories: Beginning Ending Raw materials 0 \ 10,500 WIP 0 none Finished goods 0 1,200 units The total contribution margin under variable costing is:

No one cost driver is right for all situations.

When actual volume is less than expected volume, the production- volume variance is:

Cowboys Company had the following information: Budget ed factory overhead \ 80,000 Actual f actory overhead \ 82,000 Budgeted: M achine hours 40,000 Actual: M achine hours 39,500 The budgeted factory- overhead rate using machine hours as the cost driver is:

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

The proration method of disposing of overhead variances prorates the variance among three accounts including Direct- Materials Inventory, WIP Inventory, and Finished Goods Inventory.

Applied fixed cost is computed using:

In the immediate write- off approach, overapplied overhead is regarded as:

Samantha Company's overhead cost information is given below: Standard applied overhead $\quad \$ 210,000$ Budgeted overhead based on standard machinehours allowed $\quad\mathbf { \$ 23 0 , 0 0 0 }$ Budgeted overhead based on actual machinehours used $\quad 215,000$ Actual overhead $\quad \mathbf { \$ 2 0 5 , 0 0 0 }$ Required: a. Compute the total overhead variance. b. Calculate the flexible- budget variance c. Determine the production- volume variance.

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

Pippen Company prepared the following absorption- costing income statement for the year ended May 31, 20X5: Sales (16,000 units ) \ 320,000 Cost of goods sold Gross margin \ 104,000 Selling and administrative expens es Op erating inc ome \ 58,000 Additional information follows: Selling and administrative expenses include $1.50 of variable cost per unit sold. There was no beginning inventory, and 17,500 units were produced. Variable manufacturing costs were $11 per unit. Actual fixed costs were equal to budgeted fixed costs. Required: Prepare a variable costing income statement for the same period.