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

Explain how are the fixed manufacturing overhead costs treated under Generally Accepted Accounting Principles?

Which of the following statements is true of fixed overhead variances?

Answer the following questions using the information below: Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces the cars in batches. To manufacture a batch of the cars, Munoz, 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 spending variance for variable overhead setup costs.

Use the following information to answer the questions below: Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 11,250 units Budgeted machine-hours 22,500 hours Budgeted variable manufacturing overhead costs for 11,250 units \ 213,750 Actual output urits produced 11,500 units Actual machine-hours used 22,000 hours Actual variable manufacturing overhead costs \ 225,000 -What is the flexible-budget amount for variable manufacturing overhead?

Under standard costing,fixed overhead costs are treated as if they are a variable cost.

Use the following information to answer the questions below: Baseballic Corporation manufactures baseball uniforms and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 11,250 units Budgeted machine-hours 22,500 hours Budgeted variable manufacturing overhead costs for 11,250 units \ 213,750 Actual output urits produced 11,500 units Actual machine-hours used 22,000 hours Actual variable manufacturing overhead costs \ 225,000 -What is the amount for budgeted variable manufacturing overhead cost per unit?

Answer the following questions using the information below: Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces the cars in batches. To manufacture a batch of the cars, Munoz, 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 spending variance for fixed setup overhead costs.

Managers can always view a favorable variable overhead spending variance as desirable.

Answer the following questions using the information below: Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, 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: Budget Actual Amounts Amounts Units produced and sold 10,000 9,000 Batch size (number of units per batch) 400 375 Setup-hours per batch 6 5.5 Variable overhead cost per setup-hour \ 50 \ 52 Total fixed setup overhead costs \ 18,000 \ 17,750 -Calculate the flexible-budget variance for variable overhead setup costs.

Neon Company manufactured 2,500 units during April with a total overhead budget of $55,000.However,while manufacturing the 2,500 units 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 information missing from the report is lettered in the following set of data: Required: Compute the missing elements in the report represented by the lettered items.

Answer the following questions using the information below: Deocomfort Corporation manufactured 54,000 door jambs during September. The following fixed overhead data relates to September: Actual Static Budget Production 55,500 units 55,000 units Machine-hours 985 hours 1,100 hours Fixed overhead costs for September \ 50,500 \ 50,600 -What is the amount of fixed overhead allocated to production?

Green Energy Inc.produces fertilizer and distributes the product by using his tanker trucks.Green Energy uses budgeted fleet hours to allocate variable manufacturing overhead.The following information relates to the company's manufacturing overhead data: Budgeted output units 730 truckloads Budgeted fleet hours 511 hours Budgeted pounds of fertilizer 24,000,000 pounds Budgeted variable manufacturing overhead costs for 730 loads \ 89,425 720 truckloads Actual output units produced and delivered 436 hours Actual fleet hours 25,200,000 pounds Actual pounds of fertilizer produced and delivered \ 87,120 What is the budgeted variable overhead cost rate per output unit?

At the end of the fiscal year,the fixed overhead spending variance is always prorated among work-in-process control,finished goods control,and cost of goods sold on the basis of the fixed overhead allocated to these accounts.

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

Which of the following is a step in developing budgeted variable overhead rates?

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

Which of the following statements is true of variable overhead costs?

Argon Company makes clocks.The fixed overhead costs for 2015 total $880,000.The company uses direct labor-hours for fixed overhead allocation and anticipates 220,000 hours during the year for 330,000 units.An equal number of units are budgeted for each month. During June,32,000 clocks were produced and $72,000 was spent on fixed overhead. Required: a.Determine the fixed overhead rate for 2015 based on units of input. b.Determine the fixed overhead static-budget variance for June. c.Determine the production-volume overhead variance for June.

Answer the following questions using the information below: Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November: Actual Budgeted Production 16,000 units 18,000 units Machine-hours 7,875 hours 9,000 hours Variable overhead cost per machine-hour: \ 31.00 \ 31.50 -What is the variable overhead spending variance?

Use the following information to answer the questions below: Mynarc Corporation produces fertilizer and distributes the product by using his tanker trucks. Mynarc uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units 675 truckloads Budgeted fleet hours 540 hours Budgeted variable manufacturing overhead costs for 675 loads \ 82,350 Actual output units produced and delivered 630 truckloads Actual fleet hours 436 hours Actual variable manufacturing overhead costs \ 77,490 -What is the flexible-budget variance for variable manufacturing overhead?