Exam 13: Accounting for Overhead Costs

The most important contributor to the variance between actual and applied overhead costs is ________.

Marian Industries Inc.reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \1 00.00 Sales \1 00,000 Direct materials used \ 37,000 Direct labor \3 6,000 Variable factory overhead \2 5,000 Fixed factory overhead \2 0,000 Variable selling and administrative expenses \2 ,000 Fixed selling and administrative expenses \ 7,500 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 1,200 units Under variable costing,what is the cost of the finished goods ending inventory?

Dolhun Industries Inc.reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \ 65 Sales \7 8,000 Direct materials used \ 25,000 Direct labor \3 5,000 Variable factory overhead \1 5,000 Fixed factory overhead \1 0,000 Variable selling and administrative expenses \3 ,000 Fixed selling and administrative expenses \ 5,000 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 1,200 units Under variable costing,the variable manufacturing cost of goods sold is ________.

Variable costing considers fixed manufacturing overhead costs as a(n)________.

There should be a strong cause-and-effect relationship between factory overhead costs incurred and the cost-allocation base chosen for its application.

The following information was compiled by Gorgeous Incorporated: Expected volume of production 50,000 units Actual volume of production 47,500 units Budgeted fixed overhead costs (for 50,000 budgeted units) \4 00,000 Actual fixed overhead costs \4 15,000 Actual variable overhead costs \7 90,000 Budgeted variable overhead costs (for 50,000 bud geted units) \ 855,000 Assume the cost-allocation base for overhead costs is units of production.What is the production volume variance?

Absorption-costing income is not affected by differences in expected volume and actual volume.

When the number of units sold exceeds the number of units produced,net income under variable costing ________ net income under absorption costing.

The variable-costing method regards fixed manufacturing costs as a period expense when incurred.

Johnson Company has the following information available at the end of the fiscal year: Finished goods inventory, January 1, 2015 12,000 units Finished goods inventory, December 31, 2015 14,000 units Work in process inventory, January 1, 2015 10,000 units Work in process inventory, December 31, 2015 11,000 units Raw materials inventory, January 1, 2015 1,000 units Raw materials inventory, December 31, 2015 5,000 units Actual fixed overhead cost rate \ 2.05 per unit Actual variable overhead cost rate \3 .10 per unit Budgeted fixed overhead cost rate \ 2.00 per unit Budgeted variable overhead cost rate \3 .00 per unit Assume operating income under absorption costing is $100,000.What is the difference in operating income between absorption costing and variable costing?

The following information was compiled by Frank Ironman Incorporated: Expected volume of production 50,000 units Actual volume of production 47,500 units Budgeted fixed overhead costs (for 50,000 budgeted units) \2 00,000 Actual fixed overhead costs \2 20,000 Actual variable overhead costs \7 90,000 Budgeted variable overhead costs (for 50,000 bud geted units) \ 855,000 Assume the cost allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?

Underapplied fixed factory overhead can be explained by ________ variance and ________ variance.

Stanley Company applies overhead based on machine hours.The following data was available: Budgeted factory overhead costs \2 80,000 Budgeted machine hours \2 0,000 Actual factory overhead costs \2 92,000 Actual machine hours \1 9,050 Cost of goods sold \5 60,000 Direct materials inventory, ending balance \ 60,000 Work-in-process inventory, ending balance \1 90,000 Finished goods inventory, ending balance \ 250,000 Required: A) Compute the budgeted factory overhead rate. B) Compute the underapplied or overapplied factory overhead. C) Under the immediate write-off approach to overhead variances, how would you dispose of the overhead variance? D) If the immediate write-off approach to overhead variances is not used, how would you dispose of the overhead variance?

Lorna Company reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \ 65 Sales \7 8,000 Direct materials used \ 25,000 Direct labor \3 5,000 Variable factory overhead \1 5,000 Fixed factory overhead \1 0,000 Variable selling and administrative expenses \3 ,000 Fixed selling and administrative expenses \ 5,000 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 1,200 units Under variable costing,the cost of ending inventory of finished goods is ________.

When the actual volume is less than the expected volume,the production volume variance is ________ because the usage of the facilities is ________.

When selecting a cost driver for a budgeted overhead rate,no one cost driver is appropriate for all situations.

The production volume variance is a line item on the ________ income statement.

Randy Company has obtained the following data for the first year of operations: Sales \2 ,868,750 Direct materials and labor \1 ,125,000 Variable manufacturing overhead \ 431,250 Fixed manufacturing overhead \ 656,250 Variable selling expenses \ 337,500 Fixed selling expenses \ 131,250 Units produced 125,000 Units sold 112,500 Units expected to be produced 125,000 Required: A) Using variable costing, prepare an income statement for the first year of operations. Assume budgeted fixed costs were equal to actual fixed costs. B) Using absorption costing, prepare an income statement for the first year of operations. Assume budgeted fixed costs were equal to actual fixed costs.

In practice,proration of overhead variances among the affected accounts is undertaken when it materially affects inventory valuations and net income.

Under absorption costing,fixed manufacturing overhead costs appear on two places on the income statement that include ________ and ________.