Question 1

An unfavorable variable overhead efficiency variance indicates that ________.

Accepted Answer

A)  the actual rate of variable overhead was more than budgeted rate 
B)  the price of variable overhead items was less than budgeted 
C)  the variable overhead cost-allocation base was not used efficiently 
D)  the variable overhead cost-allocation base was used efficiently 
A)  the actual rate of variable overhead was more than budgeted rate 
B)  the price of variable overhead items was less than budgeted 
C)  the variable overhead cost-allocation base was not used efficiently 
D)  the variable overhead cost-allocation base was used efficiently

Question 2

Fixed overhead costs include ________.

Accepted Answer

A)  the cost of sales commissions 
B)  property taxes paid on plant facilities 
C)  energy costs 
D)  indirect materials 
A)  the cost of sales commissions 
B)  property taxes paid on plant facilities 
C)  energy costs 
D)  indirect materials

Question 3

The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-cost efficiency variance.

Accepted Answer

A)  the same as; the same as 
B)  the same as; differently than 
C)  differently than; the same as 
D)  differently than; differently than 
A)  the same as; the same as 
B)  the same as; differently than 
C)  differently than; the same as 
D)  differently than; differently than

Question 4

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:
 $\begin{array}{lr}
\text { Budgeted output units } & 31,000 \text { urits } \
\text { Budgeted machine-hours } & 16,585 \text { hours } \
\text { Budgeted variable manufacturing overhead costs for } 31,000 \text { units } & \$ 348,285 \
\text { Actual output units produced } & 33,000 \text { urits } \
\text { Actual machine-hours used } & 14,400 \text { hours } \
\text { Actual variable manufacturing overhead costs } & \$ 384,000
\end{array}$
-What is the flexible-budget variance for variable manufacturing overhead?

Accepted Answer

A)  $13,245 unfavorable 
B)  $35,715 unfavorable 
C)  $13,245 favorable 
D)  $35,715 favorable 
A)  $13,245 unfavorable 
B)  $35,715 unfavorable 
C)  $13,245 favorable 
D)  $35,715 favorable

Question 5

Marshall Company uses a standard cost system.In April,$266,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $300,000.Which of the following variable manufacturing overhead entries would have been recorded for March?

Accepted Answer

A) Accounts Payable Control and other accounts $ \quad 300,000 $
 Work-in-Process Control$ \quad 300,000 $ 
B) Variable Manufacturing Overhead Allocated $ \quad 300,000 $
 Accounts Payable and other accounts$ \quad 300,000 $ 
C) Work-in-Process Control$\quad266,000$
Accounts Payable Control and other accounts$\quad266,000$ 
D) Variable Manufacturing Overhead Control $\quad266,000$
Accounts Payable Control and other accounts$\quad266,000$ 
A) Accounts Payable Control and other accounts $ \quad 300,000 $
 Work-in-Process Control$ \quad 300,000 $ 
B) Variable Manufacturing Overhead Allocated $ \quad 300,000 $
 Accounts Payable and other accounts$ \quad 300,000 $ 
C) Work-in-Process Control$\quad266,000$
Accounts Payable Control and other accounts$\quad266,000$ 
D) Variable Manufacturing Overhead Control $\quad266,000$
Accounts Payable Control and other accounts$\quad266,000$

Question 6

The variable overhead spending variance measures the difference between ________,multiplied by the actual quantity of variable overhead cost-allocation base used.

Accepted Answer

A)  the actual variable overhead cost per unit and the budgeted variable overhead cost per unit 
B)  the standard variable overhead cost rate and the budgeted variable overhead cost rate 
C)  the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit 
D)  the actual quantity per unit and the budgeted quantity per unit 
A)  the actual variable overhead cost per unit and the budgeted variable overhead cost per unit 
B)  the standard variable overhead cost rate and the budgeted variable overhead cost rate 
C)  the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit 
D)  the actual quantity per unit and the budgeted quantity per unit

Question 7

Prorated allocation of production-volume variance results in a higher operating income for current year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 8

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

Accepted Answer

The first concern would be the fact that

Question 9

An unfavorable production-volume variance ________.

Accepted Answer

A)  is not a good measure of a lost production opportunity 
B)  indicates that the company had reduced its per unit fixed overhead cost to improve sales 
C)  measures the amount of extra fixed costs planned for but not used 
D)  takes into account the effect of additional revenues due to maintaining higher prices 
A)  is not a good measure of a lost production opportunity 
B)  indicates that the company had reduced its per unit fixed overhead cost to improve sales 
C)  measures the amount of extra fixed costs planned for but not used 
D)  takes into account the effect of additional revenues due to maintaining higher prices

Question 10

Answer the following questions using the information below:
Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September:
 $\begin{array}{lrr}&\text { Actual } &\text { Budgeted }\
\text { Production } & 30,000 \text { units } & 24,000 \text { units } \
\text { Machine-hours } & 15,000 \text { hours } & 10,800 \text { hours } \
\text { Variable overhead cost per machine-hour: } & \$ 11.00 & \$ 11.25
\end{array}$
-What is the actual variable overhead cost?

Accepted Answer

A)  $121,500 
B)  $151,875 
C)  $165,000 
D)  $168,750 
A)  $121,500 
B)  $151,875 
C)  $165,000 
D)  $168,750

Question 11

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:
 $\begin{array}{lrr}&\text { Budget } & \text { Actual } \
&\text { Amounts } & \text { Amounts }\
\text { Units produced and sold } & 10,000 & 9,000 \
\text { Batch size (number of units per batch) } & 400 & 375 \
\text { Setup-hours per batch } & 6 & 5.5 \
\text { Variable overhead cost per setup-hour } & \$ 50 & \$ 52 \
\text { Total fixed setup overhead costs } & \$ 18,000 & \$ 17,750
\end{array}$
-Calculate the spending variance for fixed overhead setup costs.

Accepted Answer

A)  $250 unfavorable 
B)  $150 unfavorable 
C)  $250 favorable 
D)  $150 favorable 
A)  $250 unfavorable 
B)  $150 unfavorable 
C)  $250 favorable 
D)  $150 favorable

Question 12

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:
 $\begin{array}{lrr}&\text { Budget } & \text { Actual } \
&\text { Amounts } & \text { Amounts }\
\text { Units produced and sold } & 10,000 & 9,000 \
\text { Batch size (number of units per batch) } & 400 & 375 \
\text { Setup-hours per batch } & 6 & 5.5 \
\text { Variable overhead cost per setup-hour } & \$ 50 & \$ 52 \
\text { Total fixed setup overhead costs } & \$ 18,000 & \$ 17,750
\end{array}$
-Calculate the spending variance for variable overhead setup costs.

Accepted Answer

A)  $150 unfavorable 
B)  $150 favorable 
C)  $264 unfavorable 
D)  $264 favorable 
A)  $150 unfavorable 
B)  $150 favorable 
C)  $264 unfavorable 
D)  $264 favorable

Question 13

When forecasting fixed costs,managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 14

Standard costing is a cost system that allocates overhead costs on the basis of overhead cost rates based on actual overhead costs times the standard quantities of the allocation bases allowed for the actual outputs produced.

Accepted Answer

A) True 
 B)False

Question 15

Under standard costing,________.

Accepted Answer

A)  fixed overhead costs are treated as if they are a variable cost 
B)  fixed overhead costs are treated as if they are a fixed cost 
C)  variable overhead costs are treated as if they are a fixed cost 
D)  fixed overhead costs are treated as if they are a sunk cost 
A)  fixed overhead costs are treated as if they are a variable cost 
B)  fixed overhead costs are treated as if they are a fixed cost 
C)  variable overhead costs are treated as if they are a fixed cost 
D)  fixed overhead costs are treated as if they are a sunk cost

Question 16

Computing standard costs at the start of the budget period results in a complex record keeping system.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following journal entries is used to record actual variable overhead costs incurred?

Accepted Answer

A)  Accounts Payable
Variable Overhead Control 
B)  Variable Overhead Control
Accounts Receivable 
C)  Work-in-Process Control
Variable Overhead Control 
D)  Variable Overhead Control
Accounts Payable 
A)  Accounts Payable
Variable Overhead Control 
B)  Variable Overhead Control
Accounts Receivable 
C)  Work-in-Process Control
Variable Overhead Control 
D)  Variable Overhead Control
Accounts Payable

Question 18

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 flexible-budget variance for variable overhead setup costs.

Accepted Answer

A)  $600 favorable 
B)  $1,300 favorable 
C)  $600 unfavorable 
D)  $1,300 unfavorable 
A)  $600 favorable 
B)  $1,300 favorable 
C)  $600 unfavorable 
D)  $1,300 unfavorable

Question 19

The flexible budget enables to highlight the differences ________.

Accepted Answer

A)  between actual costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level 
B)  between budgeted costs and budgeted quantities versus actual costs and budgeted quantities for the budgeted output level 
C)  between budgeted costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level 
D)  between actual costs and actual quantities versus budgeted costs and budgeted quantities for the budgeted output level 
A)  between actual costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level 
B)  between budgeted costs and budgeted quantities versus actual costs and budgeted quantities for the budgeted output level 
C)  between budgeted costs and actual quantities versus budgeted costs and budgeted quantities for the actual output level 
D)  between actual costs and actual quantities versus budgeted costs and budgeted quantities for the budgeted output level

Question 20

When variances are immaterial,which of the following statements is true of the journal entry to write-off the variable overhead variance accounts?

Accepted Answer

A)  Cost of Goods Sold account will always be debited. 
B)  Unfavorable efficiency variance will be credited. 
C)  Favorable efficiency variance will be credited. 
D)  Cost of Goods Sold account will always be credited. 
A)  Cost of Goods Sold account will always be debited. 
B)  Unfavorable efficiency variance will be credited. 
C)  Favorable efficiency variance will be credited. 
D)  Cost of Goods Sold account will always be credited.

An unfavorable variable overhead efficiency variance indicates that ________.

Fixed overhead costs include ________.

The variable overhead efficiency variance is computed and interpreted the direct-cost efficiency variance.

Marshall Company uses a standard cost system.In April,$266,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $300,000.Which of the following variable manufacturing overhead entries would have been recorded for March?

The variable overhead spending variance measures the difference between ________,multiplied by the actual quantity of variable overhead cost-allocation base used.

Prorated allocation of production-volume variance results in a higher operating income for current year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

An unfavorable production-volume variance ________.

When forecasting fixed costs,managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.

Standard costing is a cost system that allocates overhead costs on the basis of overhead cost rates based on actual overhead costs times the standard quantities of the allocation bases allowed for the actual outputs produced.

Under standard costing,________.

Computing standard costs at the start of the budget period results in a complex record keeping system.

Which of the following journal entries is used to record actual variable overhead costs incurred?

The flexible budget enables to highlight the differences ________.

When variances are immaterial,which of the following statements is true of the journal entry to write-off the variable overhead variance accounts?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters

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

An unfavorable variable overhead efficiency variance indicates that ________.

Fixed overhead costs include ________.

The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-cost efficiency variance.

Marshall Company uses a standard cost system.In April,$266,000 of variable manufacturing overhead costs were incurred and the flexible-budget amount for the month was $300,000.Which of the following variable manufacturing overhead entries would have been recorded for March?

The variable overhead spending variance measures the difference between ________,multiplied by the actual quantity of variable overhead cost-allocation base used.

Prorated allocation of production-volume variance results in a higher operating income for current year than if the entire favorable production-volume variance were credited to Cost of Goods Sold.

Explain two concerns when interpreting the production-volume variance as a measure of the economic cost of unused capacity.

An unfavorable production-volume variance ________.

When forecasting fixed costs,managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.

Standard costing is a cost system that allocates overhead costs on the basis of overhead cost rates based on actual overhead costs times the standard quantities of the allocation bases allowed for the actual outputs produced.

Under standard costing,________.

Computing standard costs at the start of the budget period results in a complex record keeping system.

Which of the following journal entries is used to record actual variable overhead costs incurred?

The flexible budget enables to highlight the differences ________.

When variances are immaterial,which of the following statements is true of the journal entry to write-off the variable overhead variance accounts?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters

The variable overhead efficiency variance is computed and interpreted the direct-cost efficiency variance.