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

A favorable production-volume variance arises when manufacturing capacity planned for is NOT used.

If the production planners set the budgeted machine hours standards too tight,one could anticipate there would be a favorable variable overhead efficiency variance.

Answer the following questions using the information below: Sport-in Corporation manufactured 10,000 golf bags during April. The following fixed overhead data pertain to March: Actual Static Budget Production 20,000 units 20,500 units Machine-hours 5,100 hours 6,150 hours Fixed overhead cost for March \ 250,000 \ 258,300 -What is the amount of fixed overhead allocated to production?

At the start of the budget period,management will have made most decisions regarding the level of fixed overhead costs to be incurred.

A favorable fixed overhead flexible-budget variance indicates that actual fixed costs exceeded the lump-sum amount budgeted.

The amount reported for fixed overhead on the static budget is also reported ________.

Lungren has budgeted construction overhead for August of $260,000 for variable costs and $435,000 for fixed costs.Actual costs for the month totaled $275,000 for variable and $445,000 for fixed.Allocated fixed overhead totaled $440,000.The company tracks each item in an overhead control account before allocations are made to individual jobs.Spending variances for August were $10,000 unfavorable for variable and $10,000 unfavorable for fixed.The production-volume overhead variance was $5,000 favorable. Required: a.Make journal entries for the actual costs incurred. b.Make journal entries to record the variances for August.

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 flexible-budget amount?

Answer the following questions using the information below: Zitrik Corporation manufactured 100,000 buckets during February. The variable overhead cost-allocation base is $5.00 per machine-hour. The following variable overhead data pertain to February: Actual Budgeted Production 90,000 units 90,000 units Machine-hours 9,800 hours 9,000 hours Variable overhead cost per machine-hour \ 5.15 \ 5.05 -What is the variable overhead efficiency variance?

Prod uction- Variances Spending Efficiency Volume Variable manufacturing overhead \ 7,500 \ 30,000 () Fixed manufacturing overhead \ 28,000 () \ 80,000 -The total overhead variance should be ________.

Use the following information to answer the following questions: Autogas Corporation manufactures industrial-sized gas furnaces and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 31,000 urits Budgeted machine-hours 16,585 hours Budgeted variable manufacturing overhead costs for 31,000 units \ 348,285 Actual output units produced 33,000 urits Actual machine-hours used 14,400 hours Actual variable manufacturing overhead costs \ 384,000 -What is the amount of the budgeted variable manufacturing overhead cost per unit?

Prod uction- Variances Spending Efficiency Volume Variable manufacturing overhead \ 7,500 \ 30,000 () Fixed manufacturing overhead \ 28,000 () \ 80,000 -The total production-volume variance should be ________.

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

Teecorp Company uses a flexible budget for its indirect manufacturing costs.For 2015,the company anticipated that it would produce 27,000 units with 4,800 machine-hours and 8,000 employee days.The costs and cost drivers were to be as follows: Fixed Variable Cost driver Product handling \ 45,000 \ 0.75 per unit Inspection 12,000 12.00 per 100 unit batch Utilities 600 6.00 per 100 unit batch Maintenance 1,250 0.25 per machine-hour Supplies 5.00 per employee day During the year,the company processed 26,500 units,worked 8,200 employee days,and had 4,850 machine-hours.The actual costs for 2015 were: Actual costs Product handling \ 65,000 Inspection 16,200 Utilities 2,220 Maintenance 2,850 Supplies 39,900 Required: a.Prepare the static budget using the overhead items above and then compute the static-budget variances. b.Prepare the flexible budget using the overhead items above and then compute the flexible-budget variances.

An unfavorable fixed overhead spending variance indicates that ________.

Prorated allocation of production-volume variance has the effect of approximating the allocation of fixed costs based on actual costs and actual output.

Answer the following questions using the information below: Skizone Company's 4-Variance Analysis: Production-Volume Spending Variance Efficiency Variance Variance Variable overhead \ 6,500 \ 12,000 No variance Fixed overhead (a) No variance \ 46,000 -Which of the following statements is true of Skizone's overhead variances?

The production volume variance arises only for variable overhead costs.

Prod uction- Variances Spending Efficiency Volume Variable manufacturing overhead \ 7,500 \ 30,000 () Fixed manufacturing overhead \ 28,000 () \ 80,000 -In the above table,the amounts for (A)and (B),respectively,are ________.

Answer the following questions using the information below: Sport-in Corporation manufactured 10,000 golf bags during April. The following fixed overhead data pertain to March: Actual Static Budget Production 20,000 units 20,500 units Machine-hours 5,100 hours 6,150 hours Fixed overhead cost for March \ 250,000 \ 258,300 -What is the flexible-budget amount?