Question 1

Explain why sales-volume variance could be helpful to managers.

Accepted Answer

The sales-volume variance is comprised o

Question 2

The budget period for fixed overhead costs is typically ____ months to help smooth out seasonal effects.

Accepted Answer

A) 6 
B) 3 
C) 24 
D) 12 
A) 6 
B) 3 
C) 24 
D) 12

Question 3

Answer the following questions using the information below:
Hobart Corporation manufactured 20 000 heaters during November.The overhead cost-allocation base is $15.75 per machine-hour.The following variable overhead data pertain to November:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Production } & 20000 \text { units } & 22000 \text { units } \
\text { Machine-hours } & 7875 \text { hours } & 9000 \text { hours } \
\text { Variable overhead cost per machine-hour: } & \$ 15.50 & \$ 15.75
\end{array}$$
-What is the variable overhead efficiency variance?

Accepted Answer

A) $4832.39 favourable 
B) $4832.39 unfavourable 
C) $2250 unfavourable 
D) $2250 favourable 
A) $4832.39 favourable 
B) $4832.39 unfavourable 
C) $2250 unfavourable 
D) $2250 favourable

Question 4

Answer the following questions using the information below:
Norman & Appleby Corporation manufactured 15 000 golf bags during March.The fixed overhead cost-allocation rate is $20.00 per machine-hour.The following fixed overhead data pertain to March:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Static Budget } \
\text { Production } & 15000 \text { units } & 18000 \text { units } \
\text { Machine-hours } & 7650 \text { hours } & 9000 \text { hours } \
\text { Fixed overhead cost for March } & \$ 122000 & \$ 120000
\end{array}$$
-Fixed overhead is:

Accepted Answer

A) under-allocated by $3000. 
B) over-allocated by $3000. 
C) over-allocated by $28 000. 
D) under-allocated by $28 000. 
A) under-allocated by $3000. 
B) over-allocated by $3000. 
C) over-allocated by $28 000. 
D) under-allocated by $28 000.

Question 5

Answer the following questions using the information below:
Wagga Wagga Corporation manufactured 30 000 eskies during September.The overhead cost-allocation base is $12.50 per machine-hour.The following variable overhead data pertain to September:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Production } & 30000 \text { units } & 24000 \text { units } \
\text { Machine-hours } & 15000 \text { hours } & 10800 \text { hours } \
\text { Variable overhead cost per machine-hour: } & \$ 12.00 & \$ 12.50
\end{array}$$
-What is the actual variable overhead cost?

Accepted Answer

A) $121 500 
B) $151 875 
C) $180 000 
D) $168 750 
A) $121 500 
B) $151 875 
C) $180 000 
D) $168 750

Question 6

Answer the following questions using the information below:
Melbourne Corporation manufactured 57 000 door jambs during September.The fixed-overhead cost-allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Static Budget } \
\text { Production } & 57000 \text { units } & 60000 \text { units } \
\text { Machine-hours } & 985 \text { hours } & 1200 \text { hours } \
\text { Fixed overhead costs for September } & \$ 54300 & \$ 60000
\end{array}$$
-What is the fixed overhead spending variance?

Accepted Answer

A) $4100 unfavourable 
B) $5750 favourable 
C) $5700 favourable 
D) $5750 unfavourable 
A) $4100 unfavourable 
B) $5750 favourable 
C) $5700 favourable 
D) $5750 unfavourable

Question 7

Answer the following questions using the information below:
Wagga Wagga Corporation manufactured 30 000 eskies during September.The overhead cost-allocation base is $12.50 per machine-hour.The following variable overhead data pertain to September:
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Production } & 30000 \text { units } & 24000 \text { units } \
\text { Machine-hours } & 15000 \text { hours } & 10800 \text { hours } \
\text { Variable overhead cost per machine-hour: } & \$ 12.00 & \$ 12.50
\end{array}$$
-What is the variable overhead efficiency variance?

Accepted Answer

A) $13 125 unfavourable 
B) $18 750 unfavourable 
C) $30 375 unfavourable 
D) $7500 favourable 
A) $13 125 unfavourable 
B) $18 750 unfavourable 
C) $30 375 unfavourable 
D) $7500 favourable

Question 8

Explain why there is no efficiency variance for fixed manufacturing overhead costs.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

There is no efficiency variance for fixe

Question 9

Answer the following questions using the information below:
Chappell Brothers Corporation manufactures promotional cricket hoodies and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
 $$\begin{array} { l r } 
\text { Budgeted output units } & 25000 \text { units } \
\text { Budgeted machine-hours } & 30000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for } 25000 \text { units } & \$ 360000 \
& \
\text { Actual output units produced } & 20000 \text { units } \
\text { Actual machine-hours used } & 28000 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 342000
\end{array}$$
-Variable-manufacturing overhead costs were ________ for actual output.

Accepted Answer

A) lower than expected 
B) higher than expected 
C) the same as expected 
D) indeterminable 
A) lower than expected 
B) higher than expected 
C) the same as expected 
D) indeterminable

Question 10

Detailed 4-variance analyses are most common in _________________ businesses.

Accepted Answer

A) small,simple 
B) large,complex 
C) manufacturing 
D) small,complex 
A) small,simple 
B) large,complex 
C) manufacturing 
D) small,complex

Question 11

The variable overhead flexible-budget variance measures the difference between actual variable overhead costs incurred and flexible-budget variable overhead amounts.

Accepted Answer

A) True 
 B)False

Question 12

What might a favourable fixed overhead spending variance indicate?

Accepted Answer

A) More capacity was used than planned. 
B) The denominator level was less than planned. 
C) A plant expansion did not proceed as originally planned. 
D) The fixed overhead cost-allocation base was not used efficiently. 
A) More capacity was used than planned. 
B) The denominator level was less than planned. 
C) A plant expansion did not proceed as originally planned. 
D) The fixed overhead cost-allocation base was not used efficiently.

Question 13

Which of the following is NOT a step in developing budgeted variable overhead rates?

Accepted Answer

A) Selecting the cost-allocation bases to use 
B) Estimating the budgeted denominator level based on expected utilisation of available capacity 
C) Identifying the variable overhead costs associated with each cost-allocation base 
D) Choosing the period to be used for the budget 
A) Selecting the cost-allocation bases to use 
B) Estimating the budgeted denominator level based on expected utilisation of available capacity 
C) Identifying the variable overhead costs associated with each cost-allocation base 
D) Choosing the period to be used for the budget

Question 14

For fixed manufacturing overhead,there is no:

Accepted Answer

A) efficiency variance. 
B) production-volume variance. 
C) spending variance. 
D) flexible-budget variance. 
A) efficiency variance. 
B) production-volume variance. 
C) spending variance. 
D) flexible-budget variance.

Question 15

A favourable variable set-up overhead efficiency variance could be due to actual set-up-hours exceeding the set-up-hours planned for the units produced.

Accepted Answer

A) True 
 B)False

Question 16

Winton Corporation produces a special line of basketball hoops.Winton Corporation produces the hoops in batches.To manufacture a batch of the basketball hoops,Winton Corporation must set up the machines and moulds.Set-up costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Set-up Department is responsible for setting up machines and moulds for different styles of basketball hoops.
Set-up overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of set-up-hours.The following information pertains to January 2018.
 $\begin{array}{lrr}
&\text { Static-budget } & \text { Actual } \
&\text { Amounts } & \text { Amounts }\
\text { Basketball hoops produced and sold } & 40000 & 38000 \
\text { Batch size (number of units per batch) } & 200 & 250 \
\text { Set-up-hours per batch } & 5 & 4 \
\text { Variable overhead cost per set-up-hour } & \$ 10 & \$ 9 \
\text { Total fixed set-up overhead costs } & \$ 22500 & \$ 21000
\end{array}$
 
Required:
a.Calculate the efficiency variance for variable set-up overhead costs.
b.Calculate the spending variance for variable set-up overhead costs.
c.Calculate the flexible-budget variance for variable set-up overhead costs.
d.Calculate the spending variance for fixed set-up overhead costs.
e.Calculate the production-volume variance for fixed set-up overhead costs.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.((38 000/250)× 4 × $10)- ((38 000/200)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The fixed overhead flexible-budget variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget.

Accepted Answer

A) True 
 B)False

Question 19

Answer the following questions using the information below:
Chappell Brothers Corporation manufactures promotional cricket hoodies and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
 $$\begin{array} { l r } 
\text { Budgeted output units } & 25000 \text { units } \
\text { Budgeted machine-hours } & 30000 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for } 25000 \text { units } & \$ 360000 \
& \
\text { Actual output units produced } & 20000 \text { units } \
\text { Actual machine-hours used } & 28000 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 342000
\end{array}$$
-What is the budgeted variable overhead cost rate per output unit?

Accepted Answer

A) $12.00 
B) $12.21 
C) $14.40 
D) $19.00 
A) $12.00 
B) $12.21 
C) $14.40 
D) $19.00

Question 20

To plan variable overhead costs effectively for a product or service,managers must eliminate the activities that do not add value to the product or service.

Accepted Answer

A) True 
 B)False

Explain why sales-volume variance could be helpful to managers.

The budget period for fixed overhead costs is typically ____ months to help smooth out seasonal effects.

Explain why there is no efficiency variance for fixed manufacturing overhead costs. _ _

Detailed 4-variance analyses are most common in _________________ businesses.

The variable overhead flexible-budget variance measures the difference between actual variable overhead costs incurred and flexible-budget variable overhead amounts.

What might a favourable fixed overhead spending variance indicate?

Which of the following is NOT a step in developing budgeted variable overhead rates?

For fixed manufacturing overhead,there is no:

A favourable variable set-up overhead efficiency variance could be due to actual set-up-hours exceeding the set-up-hours planned for the units produced.

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

The fixed overhead flexible-budget variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget.

To plan variable overhead costs effectively for a product or service,managers must eliminate the activities that do not add value to the product or service.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 13: Flexible Budgets, Overhead Cost Variances and Management Control

Explain why sales-volume variance could be helpful to managers.

The budget period for fixed overhead costs is typically ____ months to help smooth out seasonal effects.

Explain why there is no efficiency variance for fixed manufacturing overhead costs. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Detailed 4-variance analyses are most common in _________________ businesses.

The variable overhead flexible-budget variance measures the difference between actual variable overhead costs incurred and flexible-budget variable overhead amounts.

What might a favourable fixed overhead spending variance indicate?

Which of the following is NOT a step in developing budgeted variable overhead rates?

For fixed manufacturing overhead,there is no:

A favourable variable set-up overhead efficiency variance could be due to actual set-up-hours exceeding the set-up-hours planned for the units produced.

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

The fixed overhead flexible-budget variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget.

To plan variable overhead costs effectively for a product or service,managers must eliminate the activities that do not add value to the product or service.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Explain why there is no efficiency variance for fixed manufacturing overhead costs. _ _