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

Answer the following questions using the information below: Patel Corporation manufactured 1000 coolers during October.The following variable overhead data pertain to October: Budgeted variable overhead cost per unit \ 9.00 Actual variable manufacturing overhead cost \ 8400 Flexible-bud get amount for variable manufacturing overhead \ 9000 Variable manufacturing overhead efficiency variance \ 180 unfavourable -What is the variable overhead flexible-budget variance?

Answer the following questions using the information below: Coober Pedy Industries produces air purifiers.Coober Pedy produces the air purifiers in batches.To manufacture a batch of the purifiers,Coober Pedy must set up the machines and assembly line tooling.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 tooling for different models of the air purifiers. 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 June 2018: Budget Amounts Actual Amounts Units produced and sold 10000 9000 Batch size (number of units per batch) 400 375 Set-up-hours per batch 6 5.5 Variable overhead cost per set-up-hour \ 50 \ 52 Total fixed set-up overhead costs \ 18000 \ 17750 -Calculate the production-volume variance for fixed set-up overhead costs.

Choosing the appropriate level of capacity:

In standard costing,fixed overhead cost is treated as if it is a(n)___________ cost.

The production-volume variance arises only for fixed costs.

Favourable overhead variances are always recorded with credits in a standard cost system.

Explain the meaning of a favourable production-volume variance. _____________________________________________________________________________________________ _____________________________________________________________________________________________

'Fixed overhead costs' include:

The flexible-budget amount for a fixed-cost item is also the amount included in the static budget prepared at the start of the period.

Explain what each of the variances presented under the level 4-,3-,2-,and 1-variance analysis methods shows about overhead costs. _____________________________________________________________________________________________ _____________________________________________________________________________________________