Exam 13: Accounting for Overhead Costs

Barenz Builders had the following information available for the past twelve months: Budgeted factory overhead costs \8 0,000 Actual factory overhead costs \8 2,000 Budgeted direct labor hours 40,000 Actural direct labor hours 39,500 Assume the cost driver for factory overhead costs is machine hours and a job uses 10,000 machine hours.The job was budgeted to use 11,000 machine hours.What amount of factory overhead is applied to the job?

Gross margin is a subtotal on a variable-costing income statement.

Beck Company has determined the following variances at the end of the current year: Variances Production Volume Variance \ 100,000 Favorable Flexible Budget Variance for Direct Materials \ 10,000 Unfavorable Flexible Budget Variance for Direct Labor \ 22,000 Unfavorable Flexible Budget Variance for Fixed Overhead \ 30,000 Favorable Flexible Budget Variance for Variable Overhead \ 25,000 Unfavorable Before consideration of the above variances,the company has operating income of $1,400,000.What is the operating income after considering the above variances?

Victor Company incurred actual overhead costs of $297,500 for the year.A budgeted factory overhead rate of 150% of direct labor cost was determined at the beginning of the year.Budgeted factory overhead was $300,000 and budgeted direct labor cost was $200,000.Actual direct labor cost was $205,000 for the year.The factory overhead variance for the year was ________.

The immediate write-off of overhead variances is used because ________.

In practice,it may be too costly to have several cost-allocation bases for applying overhead costs to products.

The variable-costing method does not include fixed overhead costs in a product's costs.

Jorgensen Company has determined the following variances at the end of the current year: Variances Production Volume Variance \ 200,000 Favorable Flexible Budget Variance for Direct Materials \ 10,000 Unfavorable Flexible Budget Variance of Direct Labor \ 20,000 UnFavorable Flexible Budget Variance for Fixed Overhead \ 3,000 Favorable Flexible Budget Variance for Variable Overhead \ 2,000 UnFavorable Before consideration of the above variances,the company has operating income of $1,000,000.What is the operating income after considering the above variances?

Couric Company reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit \ 117,00 Sales \ 117,000 Direct materials used \ 37,500 Direct labor \ 63,000 Variable factory overhead \ 25,500 Fixed factory overhead \ 80,000 Variable selling and administrative expenses \ 4,500 Fixed selling and administrative expenses \ 7,500 Units produced 2,000 units Units sold 1,000 units Production volume variance \ 0 Under absorption costing,what is the Cost of Goods Sold?

Joseph 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 variable manufacturing cost of goods sold?

Causes for the difference between applied and actual overhead costs do NOT include ________.

The most widely used approach in disposing of an overhead variance is proration to the affected accounts.

Why is absorption costing more widely used than variable costing?

When the units sold are greater than the units produced,variable costing income is ________ absorption costing income.When the units sold are less than the units produced,variable costing income is ________ absorption costing income.

Smith Company gathered the following information for the year ended April 30,2015: Units produced 11,200 Units expected to be produced 11,200 Units sold 8,400 Direct labor \ 99,600 Direct materials used \ 155,000 Fixed selling and administrative expenses \ 64,800 Fixed manufacturing overhead \ 52,640 Variable manufacturing overhead \ 70,200 Direct materials inventory, April 30,2015 0 Direct materials inventory, April 30,2014 0 Work-in-process inventory, April 30, 2015 0 Work-in-process inventory, April 30, 2014 0 Finished goods inventory, April 30, 2014 0 Required: A) Under variable costing, what is the cost of the finished goods inventory on April 30, 2015? B) Under absorption costing, what is the cost of the finished goods inventory on April 30, 2015?

Medved 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 cost of the ending inventory of finished goods?

Trebowski Company prepared the following absorption-costing income statement for the first year of operations.The income statement is for the fiscal year ended May 31,2015: Sales (16,000 units) \3 20,000 Cost of Goods Sold 216,000 Gross Margin 104,000 Selling and administrative expenses 46,000 Operating income \5 8,000 Additional data follow: Variable selling and administrative expenses \ 1.50 per unit Variable manufacturing costs \ 11.00 per unit Direct materials inventory, May 31,2015 0 Work-in-process inventory, May 31, 2015 0 Units produced 17,500 units Units expected to be produced 17,500 units Required: Assume actual fixed costs were equal to budgeted fixed costs.Prepare a variable-costing income statement for the year ended May 31,2015.

If a department identifies more than one cost driver for overhead costs,the department ideally should ________.

The most widely used approach to disposing of overhead variances is ________.

Machine usage in a department causes most of the overhead costs such as depreciation expense,maintenance expense and repair expense.What is the most appropriate cost-allocation base for applying overhead costs to products?