Exam 13: Accounting for Overhead Costs

Vikings Company incurred actual overhead costs of $297,500 for the year.A budgeted factory overhead rate of 150% of direct labor cost was determined at the beginning of the year.Budgeted factory overhead was $300,000 and budgeted direct labor cost was $200,000.Actual direct labor cost was $205,000 for the year.The factory overhead variance for the year was ________.

Simmonds Industries Inc.reported the following information about the production and sale of its only product during the first month of operations: Under absorption costing,what is the Cost of Goods Sold?

Smith Company applies overhead based on machine hours.The following data was available: Required: A)Compute the budgeted factory overhead rate. B)Compute the underapplied or overapplied factory overhead. C)Under the immediate write-off approach to overhead variances,how would you dispose of the overhead variance? D)If the immediate write-off approach to overhead variances is not used,how would you dispose of the overhead variance?

In practice,companies generally prorate overhead variances when it would materially affect ________ and ________.

The variable costing income statement for Brooklyn Company is seen below: Variable expenses: Variable cost of goods manufactured Fixed expenses: Required: Prepare an absorption-costing income statement for the same period of time.Assume that actual fixed costs were equal to budgeted fixed costs and the budgeted fixed overhead rate was constant over the period examined.Assume the production volume variance equals zero.

Absorption costing assigns ________ to the product.

The budgeted factory overhead rate is computed as ________.

Variable costing is more important for external reports than internal reports.

There should be a strong cause-and-effect relationship between factory overhead costs incurred and the cost-allocation base chosen for its application.

Absorption-costing income is not affected by differences in expected volume and actual volume.

The variable-costing method regards fixed manufacturing costs as a period expense when incurred.

Direct labor hours rather than direct labor cost usually drive fringe benefit costs such as pensions and payroll taxes.

When finished goods inventories decrease over an operating period,net income under variable costing ________ net income under absorption costing.

Red Company had the following information: Assume direct labor hours are the cost driver for factory overhead costs.The budgeted factory overhead rate is ________.

Variable overhead costs may have a production volume variance.

Becker Industries Inc.reported the following information about the production and sale of its only product during the first month of operations: Under variable costing,what is the product cost per unit?

Penn Company reported the following information about the production and sale of its only product during the first month of operations: Under variable costing,the operating income or loss is ________.

An unfavorable production volume variance ________ manufacturing costs on the ________ income statement.

Christian Industries Inc.reported the following information about the production and sale of its only product during the first month of operations: Under variable costing,what is the total contribution margin?

To determine the cost of a manufactured product,a normal costing system uses ________.