Question 1

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

Accepted Answer

A) True 
 B)False

Question 2

Discuss why activity-based flexible budgeting provides a more accurate prediction of costs than a traditional flexible budget.

Accepted Answer

Activity-based flexible budgeting is mor

Question 3

Refer to Jewel Company. What is the variable overhead efficiency variance?

Accepted Answer

A)  $8,300 U 
B)  $32,000 U 
C)  $38,300 U 
D)  $80,000 U 
A)  $8,300 U 
B)  $32,000 U 
C)  $38,300 U 
D)  $80,000 U

Question 4

What department is usually held responsible for the fixed overhead volume variance?

Accepted Answer

A)  top management 
B)  the planning department 
C)  the production department 
D)  the accounting department 
A)  top management 
B)  the planning department 
C)  the production department 
D)  the accounting department

Question 5

What is the best use of a static budget?

Accepted Answer

A)  to determine managerial efficiency 
B)  to assess how well costs were controlled during the year 
C)  to measure whether a manager accomplishes his or her goals 
D)  to compare expected costs at the actual level of activity with the actual costs 
A)  to determine managerial efficiency 
B)  to assess how well costs were controlled during the year 
C)  to measure whether a manager accomplishes his or her goals 
D)  to compare expected costs at the actual level of activity with the actual costs

Question 6

What is a disadvantage of an activity-budgetary system?

Accepted Answer

A)  It supports process management. 
B)  It supports continuous improvement. 
C)  It helps improve the efficiency of necessary activities. 
D)  It emphasizes cost reduction assuming one unit-based driver. 
A)  It supports process management. 
B)  It supports continuous improvement. 
C)  It helps improve the efficiency of necessary activities. 
D)  It emphasizes cost reduction assuming one unit-based driver.

Question 7

Performance reports compare actual costs with budgeted costs.

Accepted Answer

A) True 
 B)False

Question 8

The last step of building an activity-based budget is to identify the activities within an organization and to understand the relationship between changes in activity costs and changes in activity drivers.

Accepted Answer

A) True 
 B)False

Question 9

Using activity-based budgeting, assessing variances according to fixed and variable components provides insight into the source of variances.

Accepted Answer

A) True 
 B)False

Question 10

Fixed overhead was budgeted at $250,000, and 25,000 direct labour hours were budgeted. Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable. How much fixed overhead was applied?

Accepted Answer

A)  $194,000 
B)  $202,000 
C)  $206,000 
D)  $260,000 
A)  $194,000 
B)  $202,000 
C)  $206,000 
D)  $260,000

Question 11

Briefly explain the concept of fixed overhead volume variance. Suppose that the fixed overhead volume variance is unfavourable; what does that mean?

Accepted Answer

The fixed overhead volume variance is th

Question 12

$\begin{array}{lr}
\text { Variable overhead } & \$ 22,500 \
\text { Fixed ov erhead } & \underline{13,500} \
\text { Total overhead } & \$ \underline{36,000}
\end{array}$
-Refer to HyTech Production Company. What is the variable overhead efficiency variance?

Accepted Answer

A)  $562.50 F 
B)  $562.50 U 
C)  $1,687.50 F 
D)  $3,000.00 U 
A)  $562.50 F 
B)  $562.50 U 
C)  $1,687.50 F 
D)  $3,000.00 U

Question 13

How does activity flexible budgeting differ from functional-based flexible budgeting?

Accepted Answer

Activity flexible budgeting is the predi

Question 14

A static budget provides a measure of the effectiveness of a manager, whereas a flexible budget provides a measure of the efficiency of a manager.

Accepted Answer

A) True 
 B)False

Question 15

The difference between which two amounts equals the total variable overhead variance?

Accepted Answer

A)  the actual overhead and the budgeted overhead 
B)  the total actual variable overhead and the total applied overhead 
C)  the total actual variable overhead and the total applied variable overhead 
D)  the total actual variable overhead and the total budgeted variable overhead 
A)  the actual overhead and the budgeted overhead 
B)  the total actual variable overhead and the total applied overhead 
C)  the total actual variable overhead and the total applied variable overhead 
D)  the total actual variable overhead and the total budgeted variable overhead

Question 16

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Actual variable overhead - (standard variable overhead rate × actual hours)

Accepted Answer

A) Variable overhead efficiency variance 
B) Activity flexible budget 
C) Fixed overhead volume variance 
D) Variable overhead spending variance 
E) Flexible budget variance
F)Flexible budget
G)Static budget
H)Activity-based budgeting
I)Performance report
J)Fixed overhead spending variance 
A) Variable overhead efficiency variance 
B) Activity flexible budget 
C) Fixed overhead volume variance 
D) Variable overhead spending variance 
E) Flexible budget variance
F)Flexible budget
G)Static budget
H)Activity-based budgeting
I)Performance report
J)Fixed overhead spending variance

Question 17

How is the standard fixed overhead rate often calculated?

Accepted Answer

A)  budgeted fixed overhead divided by actual hours 
B)  budgeted fixed overhead divided by practical capacity measured in actual hours 
C)  budgeted fixed overhead divided by actual capacity measured in standard hours 
D)  budgeted fixed overhead divided by practical capacity measured in standard hours 
A)  budgeted fixed overhead divided by actual hours 
B)  budgeted fixed overhead divided by practical capacity measured in actual hours 
C)  budgeted fixed overhead divided by actual capacity measured in standard hours 
D)  budgeted fixed overhead divided by practical capacity measured in standard hours

Question 18

How is variable overhead applied in a standard cost system?

Accepted Answer

A)  using actual direct labour hours 
B)  using standard direct labour hours 
C)  using budgeted direct labour hours 
D)  using direct labour hours at practical capacity 
A)  using actual direct labour hours 
B)  using standard direct labour hours 
C)  using budgeted direct labour hours 
D)  using direct labour hours at practical capacity

Question 19

Which budget is used to assess managerial efficiency?

Accepted Answer

A)  static budget 
B)  capital budget 
C)  flexible budget 
D)  operational budget 
A)  static budget 
B)  capital budget 
C)  flexible budget 
D)  operational budget

Question 20

Hype Production Company
Hype Production Company uses a standard costing system. The following information pertains to the current year: $\begin{array}{ll}
\text { Actual overhead costs }(\$ 16,500 \text { is fixed) } & \$ 40,125 \
\text { Actual direct labour costs ( } 11,250 \text { hours) } & \$ 131,625 \
\text { Standard direct labour for } 5,500 \text { units: } & \
\text { Standard hours allowed } & 11,000 \text { hours } \
\text { Labour rate } & \$ 12.00
\end{array}$ The overhead rate is based on an activity level of 10,000 hours. Standard cost data for 5,000 units are as follows: $\begin{array}{lr}
\text { Variable overhead } & \$ 22,500 \
\text { Fixed overhead } & 13,500\\text { Total overhead }&\$36,000
\end{array}$
-Refer to Hype Production Company. What is the fixed overhead volume variance?

Accepted Answer

A)  $1,350 U 
B)  $1,350 F 
C)  $3,600 F 
D)  $4,125 U 
A)  $1,350 U 
B)  $1,350 F 
C)  $3,600 F 
D)  $4,125 U

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

Discuss why activity-based flexible budgeting provides a more accurate prediction of costs than a traditional flexible budget.

Refer to Jewel Company. What is the variable overhead efficiency variance?

What department is usually held responsible for the fixed overhead volume variance?

What is the best use of a static budget?

What is a disadvantage of an activity-budgetary system?

Performance reports compare actual costs with budgeted costs.

The last step of building an activity-based budget is to identify the activities within an organization and to understand the relationship between changes in activity costs and changes in activity drivers.

Using activity-based budgeting, assessing variances according to fixed and variable components provides insight into the source of variances.

Fixed overhead was budgeted at $250,000, and 25,000 direct labour hours were budgeted. Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable. How much fixed overhead was applied?

Briefly explain the concept of fixed overhead volume variance. Suppose that the fixed overhead volume variance is unfavourable; what does that mean?

Variable overhead \ 22,500 Fixed ov erhead Total overhead \ -Refer to HyTech Production Company. What is the variable overhead efficiency variance?

How does activity flexible budgeting differ from functional-based flexible budgeting?

A static budget provides a measure of the effectiveness of a manager, whereas a flexible budget provides a measure of the efficiency of a manager.

The difference between which two amounts equals the total variable overhead variance?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual variable overhead - (standard variable overhead rate × actual hours)

How is the standard fixed overhead rate often calculated?

How is variable overhead applied in a standard cost system?

Which budget is used to assess managerial efficiency?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 11: Flexible Budgets and Overhead Analysis

The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.

Discuss why activity-based flexible budgeting provides a more accurate prediction of costs than a traditional flexible budget.

Refer to Jewel Company. What is the variable overhead efficiency variance?

What department is usually held responsible for the fixed overhead volume variance?

What is the best use of a static budget?

What is a disadvantage of an activity-budgetary system?

Performance reports compare actual costs with budgeted costs.

The last step of building an activity-based budget is to identify the activities within an organization and to understand the relationship between changes in activity costs and changes in activity drivers.

Using activity-based budgeting, assessing variances according to fixed and variable components provides insight into the source of variances.

Fixed overhead was budgeted at $250,000, and 25,000 direct labour hours were budgeted. Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable. How much fixed overhead was applied?

Briefly explain the concept of fixed overhead volume variance. Suppose that the fixed overhead volume variance is unfavourable; what does that mean?

Variable overhead \ 22,500 Fixed ov erhead Total overhead \ -Refer to HyTech Production Company. What is the variable overhead efficiency variance?

How does activity flexible budgeting differ from functional-based flexible budgeting?

A static budget provides a measure of the effectiveness of a manager, whereas a flexible budget provides a measure of the efficiency of a manager.

The difference between which two amounts equals the total variable overhead variance?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual variable overhead - (standard variable overhead rate × actual hours)

How is the standard fixed overhead rate often calculated?

How is variable overhead applied in a standard cost system?

Which budget is used to assess managerial efficiency?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters