Exam 13: Accounting for Overhead Costs

Why do companies use variable costing for internal financial statements?

The following information was gathered for all the products made by the Ringaling Company: Budgeted direct labor hours 31,000 Actual direct labor hours 32,400 Budgeted factory overhead costs \1 47,250 Actual factory overhead costs \1 49,980 Assume the cost driver for factory overhead costs is direct labor hours.What is the amount of overapplied or underapplied overhead?

The following information was compiled by Fabulous 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 fixed overhead flexible budget variance?

When we use an annual overhead rate consistently throughout the year for product costing,without altering it month to month,this is called a(n)________.

Variable costing is more important for external reports than internal reports.

Gnat Company reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \ 300 Sales \ 480,000 Direct materials used \ 220,000 Direct labor \2 00,000 Variable factory overhead \6 0,000 Fixed factory overhead \8 0,000 Variable selling and administrative expenses \2 0,000 Fixed selling and administrative expenses \ 10,000 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 400 units Under variable costing,the operating income or loss is ________.

The cost driver chosen for applying factory overhead costs should be the cost driver that ________.

Union Company reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \ 225,00 Sales \ 315,000 Direct materials used \ 160,000 Direct labor \ 100,000 Variable factory overhead \ 60,000 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 20,000 Fixed selling and administrative expenses \ 30,000 Production volume variance 0 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 600 units Under absorption costing,what is the product cost per unit?

The only difference between the net income between variable costing and absorption costing is the treatment of ________.

In a clothing factory,clothing items are sewn by hundreds of workers using sewing machines and hand stitching.The sewing machines are used 80 percent of the time it takes to make the clothing items.Overhead costs relate primarily to electricity and indirect materials such as needles,bobbins,thread and thimbles.What is the most appropriate cost-allocation base for applying overhead costs to the clothing items?

Seidner Industries 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 contribution margin is ________.

The absorption costing approach applies fixed overhead costs to products as though they have a ________ pattern.

Ambrose 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 \ 225,00 Sales \ 360,000 Direct materials used \ 176,000 Direct labor \ 100,000 Variable factory overhead \ 44,000 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 20,000 Fixed selling and administrative expenses \ 10,000 Production volume variance 0 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 400 units Under absorption costing,what is the Gross Profit?

Most companies consider production volume variances to be beyond a manager's immediate control.

What is the 80-20 rule used when selecting cost allocation bases for the budgeted overhead rate?

Under absorption-costing,fixed factory overhead costs appear only in cost of goods sold.

If the actual volume of production differs from the expected volume of production,the fixed overhead costs used for budgeting and product costing are ________.

Johannes Corporation uses a budgeted factory overhead rate to apply overhead to production.Direct labor costs are the cost driver for overhead costs.The following data are available for the year ending December 31,2015: Budgeted factory overhead costs \6 75,000 Actual factory overhead costs \1 ,200,000 Budgeted direct labor costs \ 250,000 Actual direct labor costs \ 482,000 Cost of goods sold \ 150,000 Direct materials inventory, December 31,2015 \ 120,000 Work-in-process inventory, December 31,2015 \ 100,000 Finished goods inventory, December 31,2015 \ 250,000 Required: A) Compute the budgeted factory overhead rate. B) Compute the applied overhead costs. C) What is the overhead variance? D) Prorate the overhead variance to the appropriate accounts.

Under variable costing,fixed manufacturing overhead costs are a ________ cost.Under absorption costing,fixed manufacturing overhead costs are a ________ cost.

Accountants use actual overhead rates when applying overhead costs to jobs as they are completed.