Exam 8: Flexible Budgets, Overhead Cost Variances, and Management Control

When variable overhead spending variance is unfavorable, it can be safely assumed that ________.

Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers, Bristol Fabricators, Inc, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2015: Calculate the efficiency variance for variable overhead setup costs. (Round all intermediary calculations two decimal places and your final answer to the nearest whole number.)

Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of basketball hoops. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to January 2005. Required: a.Calculate the efficiency variance for variable overhead setup costs. b.Calculate the spending variance for variable overhead setup costs. c.Calculate the flexible-budget variance for variable overhead setup costs. d.Calculate the spending variance for fixed overhead setup costs. e.Calculate the production-volume variance for fixed overhead setup costs.

Davidson Corporation manufactured 52,400 units during September. The following fixed overhead data relates to September: What is the flexible-budget amount?

An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.

Possible reasons for the larger actual materials-handling labor-hours per batch include the possibility of inefficient layout of production facilities.

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: What is the amount of the budgeted variable manufacturing overhead cost per unit? (Do not round any intermediary calculations. Round your final answer to the nearest cent.)

Raposa, Inc., produces a special line of plastic toy racing cars. Raposa, Inc., produces the cars in batches. To manufacture a batch of the cars, Raposa, Inc., must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2015: Calculate the production-volume variance for fixed overhead setup costs. (Round all intermediary calculations to two decimal places and your final answer to the nearest whole number.)

Explain why managers of small businesses prefer 3-variance analysis over 4-variance analysis.

The fixed overhead cost variance can be further subdivided into the ________.

Standard costing is a costing system that allocates overhead costs on the basis of the standard overhead-cost rates times the standard quantities of the allocation bases allowed for the actual outputs produced.

Allocated fixed overhead can be expressed in terms of allocation-base units or in terms of the budgeted fixed cost per unit.

The production-volume variance may also be referred to as the ________.

Zitrik Corporation manufactured 90,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February: What is the flexible-budget amount?

Skizone Company's 4-Variance Analysis: If Skizone's combined 4-Variance Analysis shows an unfavorable spending variance of $2,900, what is the fixed overhead spending variance (a)?

Teddy Company uses a standard cost system. In May, $234,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $240,000. Which of the following variable manufacturing overhead entries would have been recorded for May?

Different management levels in Bates, Inc., require varying degrees of managerial accounting information. Because of the need to comply with the managers' requests, four different variances for manufacturing overhead are computed each month. The information for the September overhead expenditures is as follows: Required: a.Compute a 4-variance analysis for the plant controller. b.Compute a 3-variance analysis for the plant manager. c.Compute a 2-variance analysis for the corporate controller. d.Compute the flexible-budget variance for the manufacturing vice president.

Computing standard costs at the start of the budget period results in a complex record keeping system.

Lazy Guy Corporation manufactured 6,000 chairs during June. The following variable overhead data relates to June: What is the variable overhead spending variance?

When forecasting fixed costs, managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.