Exam 13: Accounting for Overhead Costs

The following information was compiled by Gidget Incorporated: Expected volume of production 50,000 units Actual volume of production 47,000 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 production volume variance?

In an absorption-costing income statement,revenue less variable manufacturing costs is equal to the gross margin.

An unfavorable production volume variance ________ manufacturing costs on the ________ income statement.

Freund 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 product cost per unit?

In practice,companies generally prorate overhead variances when it would materially affect ________ and ________.

Product costs for variable costing include direct materials,direct labor and ________.

________ is used for external reporting.

The following information was gathered for Edwards Company: Budgeted direct labor hours 75,000 Actual direct labor hours 77,500 Budgeted factory overhead costs \ 562,500 Actual factory overhead costs \ 540,000 Cost driver of overhead costs Direct labor hours Required: A) Compute the budgeted factory overhead rate. B) Compute the factory overhead applied. C) Compute the amount of underapplied or overapplied factory overhead.

Andy Basil 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 Cost of Goods Sold?

When the amount of overhead applied to a product exceeds the amount incurred to make the product,the difference is called overapplied overhead.

A favorable production volume variance indicates ________.

Variable overhead costs may have a production volume variance.

Variable costing net income does not equal absorption costing net income due to ________.

The variable-costing income statement separates costs into fixed costs and variable costs.

There is no difference between variable-costing operating income and absorption-costing operating income if there is no ________.

Which of the following variance(s)is(are)computed for fixed overhead costs?

In the immediate write-off of overhead variances,underapplied overhead is regarded as a(n)________.

Product costs for absorption costing include direct materials,direct labor and ________.

The two key items in determining the budgeted factory overhead rate are total budgeted factory overhead costs and ________.

The variable costing income statement for Bouve Company is seen below: Sales (6,000 untits \times\ 35) \2 10,000 Variable expenses: Beginning inventory ( 680 units \times\ 20 ) \ 13,600 Variable cost of goods manufactured (6,400 units \times\ 20) 128,000 Available for sale 141,600 Less: Ending inventory (1,080 units \times\ 20) 21,600 Variable manufacturing cost of goods sold 120,000 Variable selling and administrative expenses 24,000 Contribution margin 66,000 Fixed expenses: Fixed factory overhead 20,000 Fixed selling and administrative expenses 15,300 Operating income \3 0,700 Required: Prepare an absorption-costing income statement for the same period of time.Assume that actual fixed costs were equal to budgeted fixed costs and the budgeted fixed overhead rate was constant over the period examined.Assume the production volume variance equals zero.