Question 1

Fixed overhead costs are a lump sum that does not change in total despite changes in the cost driver.

Accepted Answer

A) True 
 B)False  True

Question 2

The production-volume variance

Accepted Answer

A) only pertains to variable overhead costs. 
B) only pertains to fixed overhead costs. 
C) is not applicable in analysis of inventory costs. 
D) pertains to both fixed and variable overhead costs. 
E) equals the rate variance minus the efficiency variance. 
A) only pertains to variable overhead costs. 
B) only pertains to fixed overhead costs. 
C) is not applicable in analysis of inventory costs. 
D) pertains to both fixed and variable overhead costs. 
E) equals the rate variance minus the efficiency variance. B

Question 3

In order to properly record a fixed manufacturing overhead rate variance of $30,000 unfavourable and a production-volume overhead variance of $20,000 favourable,what would the appropriate journal entry be if actual fixed overhead is $500,000?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)    D

Question 4

An unfavourable variable overhead rate variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.

Accepted Answer

A) True 
 B)False

Question 5

Davis Company produced 20,000 cases of beer.Machinery usage is 1.5 hours per case.Budget outputs are 22,000 cases.What are the required static budget machine hour inputs and flexible budget machine hour inputs,respectively?

Accepted Answer

A) 30,000 Machine hours,33,000 Machine hours 
B) 33,000 Machine hours,30,000 Machine hours 
C) 39,000 Machine hours,34,000 Machine hours 
D) 34,000 Machine hours,39,000 Machine hours 
E) 39,000 Machine hours,33,000 Machine hours 
A) 30,000 Machine hours,33,000 Machine hours 
B) 33,000 Machine hours,30,000 Machine hours 
C) 39,000 Machine hours,34,000 Machine hours 
D) 34,000 Machine hours,39,000 Machine hours 
E) 39,000 Machine hours,33,000 Machine hours

Question 6

Calculate the fixed manufacturing overhead rate variance based on the following data:

Accepted Answer

$135,000 - 65,000 -

Question 7

Cady Machine Shop used 15,000 machine hours during January.It takes 0.90 machine-hours to produce one unit;15,000 units were produced during the month.Budgeted production included 12,000 units,using 10,800 machine hours.Budgeted variable manufacturing overhead costs per machine-hour is $22.50.What is the variable overhead efficiency variance for Cady?

Accepted Answer

A) $67,500 unfavourable 
B) $67,500 favourable 
C) $37,000 favourable 
D) $33,750 favourable 
E) $33,750 unfavourable 
A) $67,500 unfavourable 
B) $67,500 favourable 
C) $37,000 favourable 
D) $33,750 favourable 
E) $33,750 unfavourable

Question 8

Use the information below to answer the following question(s).
Regal Company uses a single cost pool for fixed manufacturing overhead.The amount for June 2016 was budgeted at $500,000;however,the actual amount was $700,000.Actual production for June was 12,500 units,and actual machine hours were 10,000.Budgeted production included 17,750 units and 12,375 machine hours.
-What is Regal Company's budgeted fixed overhead rate per machine hour?

Accepted Answer

A) $28.17 per machine hour 
B) $39.44 per machine hour 
C) $40.40 per machine hour 
D) $56.56 per machine hour 
E) $65.17 per machine hour 
A) $28.17 per machine hour 
B) $39.44 per machine hour 
C) $40.40 per machine hour 
D) $56.56 per machine hour 
E) $65.17 per machine hour

Question 9

Identifying the reasons for variances is important because it helps managers plan for corrective action.

Accepted Answer

A) True 
 B)False

Question 10

The fixed overhead flexible budget variance is the same as the fixed overhead static budget variance.

Accepted Answer

A) True 
 B)False

Question 11

Capacity decisions are considered operating decisions because they involve the long-term acquisition of assets by purchase or lease.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following question(s)using the information below.
Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September:
  
-What is the production-volume variance?

Accepted Answer

A) $4,100 unfavourable 
B) $4,100 favourable 
C) $1,650 unfavourable 
D) $5,750 unfavourable 
E) $5,750 favourable 
A) $4,100 unfavourable 
B) $4,100 favourable 
C) $1,650 unfavourable 
D) $5,750 unfavourable 
E) $5,750 favourable

Question 13

The production -volume overhead variance is favourable when actual outputs exceed the denominator level.

Accepted Answer

A) True 
 B)False

Question 14

The budgeted fixed overhead rate per output unit is computed by dividing budgeted fixed overhead costs by the level of input units.

Accepted Answer

A) True 
 B)False

Question 15

Variance analysis of variable nonmanufacturing as well as variable manufacturing costs is used for pricing decisions and for decisions about which products to emphasize.

Accepted Answer

A) True 
 B)False

Question 16

When machine-hours are used as a cost allocation base,the item MOST likely to contribute to an unfavourable production-volume variance is

Accepted Answer

A) a new competitor gaining market share. 
B) a new manufacturing machine costing considerably more than expected. 
C) an increase in the cost of energy. 
D) strengthened demand for the product. 
E) an increase in the number of direct-labour hours. 
A) a new competitor gaining market share. 
B) a new manufacturing machine costing considerably more than expected. 
C) an increase in the cost of energy. 
D) strengthened demand for the product. 
E) an increase in the number of direct-labour hours.

Question 17

Answer the following question(s)using the information below.
Willis Corporation manufactures industrial-sized gas furnaces and uses budgeted machine-hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
  
-What is the variable overhead rate variance?

Accepted Answer

A) $11,000 favourable 
B) $13,611 unfavourable 
C) $13,611 favourable 
D) $19,600 favourable 
E) $19,600 unfavourable 
A) $11,000 favourable 
B) $13,611 unfavourable 
C) $13,611 favourable 
D) $19,600 favourable 
E) $19,600 unfavourable

Question 18

Zebra Jewellers planned to produce 1,800 necklaces during March with a total overhead budget of $49,600.However,while manufacturing the 2,000th necklace the microcomputer that contained the month's cost information broke down.With the computer out of commission,the accountant has been unable to complete the variance analysis report.The missing information of the report is lettered in the following set of data:
Variable overhead:
   
Fixed overhead:
   
Required:
Compute the missing elements in the report represented by the lettered items.

Accepted Answer

a.2,000 × 0.40 × $8 = $6,400
b.$8,400 -

Question 19

Describe if the production-volume variance is favourable or unfavourable for each of the following situations;and,provide the ASPE/IFRS treatment for the disposition of the variance.
1.actual output is less than expected
2.actual output is more than expected but still considered a usual fluctuation
3.actual output is more than expected and is abnormally high

Accepted Answer

1.unfavourable;expense to cost

Question 20

Which decisions are most likely to have been made by the start of the accounting period?

Accepted Answer

A) decisions affecting value-added costs 
B) decisions affecting non-value-added costs 
C) decisions affecting variable overhead costs 
D) decisions affecting both fixed and variable overhead costs 
E) decisions affecting fixed overhead costs 
A) decisions affecting value-added costs 
B) decisions affecting non-value-added costs 
C) decisions affecting variable overhead costs 
D) decisions affecting both fixed and variable overhead costs 
E) decisions affecting fixed overhead costs

Fixed overhead costs are a lump sum that does not change in total despite changes in the cost driver.

The production-volume variance

In order to properly record a fixed manufacturing overhead rate variance of $30,000 unfavourable and a production-volume overhead variance of $20,000 favourable,what would the appropriate journal entry be if actual fixed overhead is $500,000?

An unfavourable variable overhead rate variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.

Davis Company produced 20,000 cases of beer.Machinery usage is 1.5 hours per case.Budget outputs are 22,000 cases.What are the required static budget machine hour inputs and flexible budget machine hour inputs,respectively?

Calculate the fixed manufacturing overhead rate variance based on the following data:

Identifying the reasons for variances is important because it helps managers plan for corrective action.

The fixed overhead flexible budget variance is the same as the fixed overhead static budget variance.

Capacity decisions are considered operating decisions because they involve the long-term acquisition of assets by purchase or lease.

Answer the following question(s)using the information below. Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September: -What is the production-volume variance?

The production -volume overhead variance is favourable when actual outputs exceed the denominator level.

The budgeted fixed overhead rate per output unit is computed by dividing budgeted fixed overhead costs by the level of input units.

Variance analysis of variable nonmanufacturing as well as variable manufacturing costs is used for pricing decisions and for decisions about which products to emphasize.

When machine-hours are used as a cost allocation base,the item MOST likely to contribute to an unfavourable production-volume variance is

Which decisions are most likely to have been made by the start of the accounting period?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 8: Flexible Budgets,variances,and Management Control: II

Fixed overhead costs are a lump sum that does not change in total despite changes in the cost driver.

The production-volume variance

In order to properly record a fixed manufacturing overhead rate variance of $30,000 unfavourable and a production-volume overhead variance of $20,000 favourable,what would the appropriate journal entry be if actual fixed overhead is $500,000?

An unfavourable variable overhead rate variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.

Davis Company produced 20,000 cases of beer.Machinery usage is 1.5 hours per case.Budget outputs are 22,000 cases.What are the required static budget machine hour inputs and flexible budget machine hour inputs,respectively?

Calculate the fixed manufacturing overhead rate variance based on the following data:

Identifying the reasons for variances is important because it helps managers plan for corrective action.

The fixed overhead flexible budget variance is the same as the fixed overhead static budget variance.

Capacity decisions are considered operating decisions because they involve the long-term acquisition of assets by purchase or lease.

Answer the following question(s)using the information below. Rutch Corporation manufactured 54,000 door jambs during September.The fixed-overhead cost allocation rate is $50.00 per machine-hour.The following fixed overhead data pertain to September: -What is the production-volume variance?

The production -volume overhead variance is favourable when actual outputs exceed the denominator level.

The budgeted fixed overhead rate per output unit is computed by dividing budgeted fixed overhead costs by the level of input units.

Variance analysis of variable nonmanufacturing as well as variable manufacturing costs is used for pricing decisions and for decisions about which products to emphasize.

When machine-hours are used as a cost allocation base,the item MOST likely to contribute to an unfavourable production-volume variance is

Which decisions are most likely to have been made by the start of the accounting period?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters